Malaysia’s ringgit halted a three-day drop on the prospect of more European Central Bank stimulus that will spur fund flows to emerging markets.
Malaysia’s benchmark share index gained along with regional stocks before a two-day meeting in Frankfurt starting Wednesday at which the ECB is expected to ease monetary policy to bolster economic growth. Ten-year ringgit-denominated sovereign debt yields 4.21 percent compared with 0.49 percent for German bunds.
“There’s improved sentiment ahead of the ECB policy move,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “There’ll be more money moving around that’ll be looking for higher returns and yields.”
The ringgit strengthened 0.8 percent to 4.2320 a dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. The currency climbed 0.8 percent last month, the only Asian gainer, but is down 17 percent this year in the region’s worst performance.
Sovereign bonds fell, pushing the yield on the notes due October 2020 up nine basis points to 3.79 percent, according to prices from Bursa Malaysia. That was the biggest increase since August. The government will auction 4 billion ringgit ($945 million) of five-year debt on Thursday, data from the central bank’s website show.