- Exports rose 16.7% in October, more than the forecast 8.4%
- Disappointing U.S. data sent dollar lower in New York
The ringgit rose for a third week in the longest stretch since May, helped by a plunge in the dollar on disappointing U.S. data and as stabilizing Brent crude brightens the earnings outlook for Malaysia.
The ringgit gained on Friday as exports climbed almost twice as fast as economists forecast in October to provide the biggest trade surplus since 2011. While the currency has dropped the most in Asia in 2015 as depressed energy prices cut government revenue for the region’s only major net oil exporter, asset sales by debt-ridden state investment company 1Malaysia Development Bhd. have revived sentiment somewhat.
The currency appreciated 0.8 percent from Nov. 27 to 4.2260 a dollar in Kuala Lumpur, taking its advance in the past three weeks to 3.5 percent, according to prices from local banks compiled by Bloomberg. A gauge tracking the greenback declined 1.4 percent in New York, its steepest loss since March, sending the ringgit to a seven-week high of 4.1915 in early trade on Friday.
“The ringgit is higher because the dollar was weaker due to the weak U.S. manufacturing and non-manufacturing data,” said Christopher Wong, a Singapore-based senior currency analyst at Malayan Banking Bhd. “Oil prices, which have seen relative stability above $40, and the recent news flow on 1MDB, are also supportive.”
The government reported exports increased 16.7 percent in October from a year earlier, compared with the previous month’s 8.8 percent pace. That was more than the 8.4 percent median estimate in a Bloomberg survey. The ringgit extend gains to 0.5 percent on Friday from 0.3 percent prior to the data. The trade surplus widened to 12.16 billion ringgit ($2.9 billion) from 9.7 billion ringgit, and was well above the 9 billion ringgit predicted.
While the best ringgit forecasters see a further decline in the currency next year, they say it won’t be as protracted on optimism the worst of the commodities slump is over. While Brent has more than halved from its 2014 peak to around $44 a barrel, it’s been range bound since early November between $42 and $48. The Organization of the Petroleum Exporting Countries is meeting later Friday amid speculation they will cut production to support prices.
Five-year government bonds fell this week, with the yield rising six basis points to 3.75 percent, prices from Bursa Malaysia show. That’s the biggest increase since late September.