Ringgit Halts Three-Day Decline as Singapore Dollar Rallies

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Singapore dollar record versus Malaysian Ringgit
The Singapore dollar rallied to a record high versus the Malaysian ringgit

Malaysia’s ringgit halted a three-day drop, tracking a gain in the Singapore dollar, after the neighboring city-state’s central bank refrained from easing policy.

The Monetary Authority of Singapore will maintain a “modest and gradual appreciation” in its currency, it said Tuesday after data showed first-quarter economic growth exceeded estimates. The ringgit posted 2015’s biggest drop Monday following a rise in the greenback on the outlook for U.S. interest-rate increases and fell to a record against Singapore’s dollar Tuesday. The MAS surprised markets in January by easing outside of a scheduled meeting.

“The ringgit benefited from the rally in the Singapore dollar, following the MAS decision this morning to leave its policy stance unchanged,” said Khoon Goh, a Singapore-based senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. “Given the sharp depreciation in the ringgit yesterday, unwinding of short positions likely further contributed to the currency’s gains.”

The ringgit strengthened 0.2 percent to 3.7005 a dollar in Kuala Lumpur, according to data compiled by Bloomberg. The currency has weakened 5.5 percent in 2015, the worst performance in Asia, as a slide in energy prices cut earnings for Malaysia, which is a net oil exporter. A short position is a bet a currency will decline.

The ringgit is likely to trade in a 3.68 to 3.70 range this week, with a reprieve in the oil-price slide the only supporting factor, said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. Brent crude has climbed 5 percent in the past four days.

Singapore’s dollar climbed 0.6 percent against its U.S. counterpart to S$1.3660. It rose to a record 2.7202 versus the ringgit. Eight of 15 analysts surveyed by Bloomberg predicted the central bank would keep its stance Tuesday, while the rest said it would ease.

Malaysian government bonds retreated, with the yield on 10-year notes rising two basis points, or 0.02 percentage point, to 3.90 percent, data compiled by Bloomberg show. The yield on five-year debt advanced four basis points to 3.65 percent, the highest since March 18.

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