Malaysia’s ringgit advanced for a third day, the longest rally in three weeks, on speculation further monetary easing in Japan and Europe will boost demand for emerging-market assets.
The European Central Bank will cut its benchmark interest rate next week, according to 32 of 54 economists in a Bloomberg survey before a May 2 review. The Bank of Japan maintained its unprecedented plan to boost money supply at a policy meeting today. Jobless claims in the U.S. fell to a six-week low, a report showed yesterday. Malaysian government bonds were steady.
“Expectations of monetary easing have boosted Asian currencies,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore. “The U.S. jobless claims numbers lifted sentiment.
The ringgit advanced 0.1 percent to 3.0314 per dollar as of 4:51 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It has strengthened 0.7 percent in three days and is little changed for the week. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 43 basis points today to 7.98 percent.
Foreign holdings of Malaysian government bonds climbed 0.7 percent to 130.6 billion ringgit ($43 billion) in the first two months of this year, according to central bank data.
Monetary policy should remain accommodative to boost growth in advanced economies, the International Monetary Fund said in a report yesterday. Bank of Japan Governor Haruhiko Kuroda unveiled a plan on April 4 to double holdings of government bonds in the next two years targeting 2 percent annual inflation.
The yield on Malaysia’s 3.26 percent sovereign notes due March 2018 was steady today and rose one basis point, or 0.01 percentage point, this week to 3.17 percent, according to data compiled by Bloomberg.
Japan will use foreign-exchange reserves to buy the bonds of Southeast Asian countries, the Nikkei newspaper reported today, without saying where it got the information. The 10-member Association of Southeast Asian nations comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.