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Ringgit Records Best 2-Day Gain Since June as U.S. Stocks Rally

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Aug. 5 (Bloomberg) -- Malaysia’s ringgit completed its biggest two-day advance since June after gains in U.S. equities boosted sentiment for emerging-market assets.

The Standard and Poor’s 500 Index rallied yesterday after last week’s biggest loss in two years as corporate earnings beat analysts’ estimates. Confidence also improved after Portugal announced a bailout for Banco Espirito Santo SA. Malaysia will report tomorrow that its trade surplus widened in June, a Bloomberg survey showed.

“Overnight we saw risk coming back on partly due to the Banco Espirito bailout,” said Vishnu Varathan, a Mizuho Bank Ltd. economist in Singapore. The strength in the ringgit “is accounting for the overnight optimism on Wall Street,” he said.

The ringgit has appreciated 0.8 percent since its close on Aug. 1 to 3.1875 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. That’s the biggest two-day gain since June 9. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell four basis points, or 0.04 percentage point, to 5.55 percent today.

The ringgit gained as weaker-than-forecast U.S. jobs data fueled speculation the Federal Reserve won’t be in a hurry to raise interest rates, according to Macquarie Bank Ltd. Employers in the world’s largest economy added 209,000 jobs in July, missing the median estimate of economists for a gain of 230,000, an Aug. 1 report showed.

“The market is now thinking that there’s no real need for a near-term tightening,” said Nizam Idris, Macquarie’s head of foreign-exchange and fixed-income strategy in Singapore.

Malaysia’s overseas shipments climbed 15 percent in June from a year earlier, after advancing 16.3 percent the previous month, according to a Bloomberg survey before the report due at 12:01 p.m. local time tomorrow. The trade surplus widened to 5.97 billion ringgit ($1.9 billion) from 5.72 billion ringgit, the survey showed.

The yield on the nation’s 3.394 percent sovereign bonds due March 2017 was steady at 3.47 percent, data compiled by Bloomberg show. It has dropped five basis points in a month.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net Simon Harvey

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