Malaysia's Ringgit Steady, Stocks Gain as Brent Lifts Sentiment

  • Benchmark KLCI stock index closes 0.3% higher on Tuesday
  • Malaysian sovereign bonds maturing in 2020 and 2025 advance

Malaysia’s ringgit erased gains to close little changed and the benchmark stock index rose as risk appetite returned following the Paris terror attacks, with a rally in Brent crude brightening the outlook for the oil exporter.

The currency halted a three-day drop as the FTSE Bursa Malaysia KLCI Index of shares followed European and U.S. equities higher. Brent extended its gain this week to 2.5 percent, a boost for a country that derives 22 percent of government revenue from oil-related sources. Malaysia hosts leaders from the Association of Southeast Asian Nations in Kuala Lumpur this week, with security expected to be tight following the carnage in the French capital.

“Risk appetite has returned and currencies in emerging markets are regaining ground,” said Nizam Idris, head of foreign exchange and fixed-income strategy at Macquarie Bank Ltd. in Singapore. “The recovery in Brent as well as U.S. and European stocks also helped sentiment.”

The ringgit closed at 4.3830 a dollar in Kuala Lumpur after gaining as much as 0.4 percent earlier, according to prices from local banks compiled by Bloomberg. It weakened to 4.4005 on Monday, the lowest level since Oct. 5. The KLCI index rose 0.3 percent.

Brent crude has more than halved from its 2014 peak to $44.74 a barrel, helping spur a 20 percent decline in the ringgit this year, the worst performance among 24 emerging-market currencies tracked by Bloomberg after the Brazilian real and Colombian peso.

France is seeking to forge an alliance with the U.S. and Russia to destroy Islamic State, with last week’s attackers believed to be Europeans directed from Syria. A Malaysian cell of the terrorist group planned to kidnap government leaders to demand the release of militants detained locally, the Star newspaper reported on Tuesday, citing Special Branch Counter Terrorism Division head Ayob Khan.

Government bonds climbed. The yields on five-year debt and 10-year fell two basis points each to 3.81 percent and 4.33 percent respectively, according to prices from Bursa Malaysia.

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