The ringgit strengthened for a fifth week on speculation Japan’s unprecedented monetary-easing program is spurring investment in Malaysian assets. Government bonds fell.
The ringgit has been the second-biggest gainer against the dollar this month among Asia’s 11 most-traded currencies after the Bank of Japan announced April 4 that it would buy 7.5 trillion yen ($76 billion) of debt a month. The North Asian nation is Malaysia’s second-biggest overseas market. Prime Minister Najib Razak said this week he is “cautiously optimistic” his party can reclaim a two-thirds majority in parliament in the general elections on May 5.
“The ringgit and other Asian currencies have gained on capital inflows from Japan,” said Wee-Khoon Chong, a rates strategist in Hong Kong at Societe Generale SA. The ringgit may weaken in the near term due to investor caution before the elections, he said.
The Malaysian currency strengthened 0.1 percent this week to 3.0343 per dollar as of 4:44 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The ringgit, which was little changed today, has advanced 2 percent this month. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 36 basis points today and 83 basis points this week to 7.81 percent, according to data compiled by Bloomberg.
The yield on the 3.26 percent sovereign bonds due March 2018 rose one basis point, or 0.01 percentage point, this week to 3.17 percent and was steady today, according to data compiled by Bloomberg.