- Fed's gradual approach to tightening policy supports ringgit
- Stocks and government bonds bolstered by foreign buying
Malaysia’s ringgit was poised for its biggest monthly gain since the Asian financial crisis as a rally in crude prices brightened the prospects for the region’s only major net oil exporter.
The ringgit led the advance in Southeast Asian currencies in March as global funds returned to emerging markets after the Federal Reserve signaled a gradual approach to raising U.S. interest rates. Brent crude extended a recovery from a 12-year low reached in January, auguring well for a nation that derives 22 percent of government revenue from oil-related sources.
“A dovish Fed, supportive oil prices, stabilizing market sentiment and decent interest in local currency bonds” spurred the ringgit’s gains this month, said Christopher Wong, foreign-exchange strategist at Malayan Banking Bhd. in Singapore.
The ringgit strengthened 1.6 percent on Wednesday and 6.7 percent in March to 3.9383 a dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. The currency is set for its biggest monthly advance since September 1998.
Overseas investors are returning to Malaysian assets after a 35 percent slump in Brent crude last year spurred the ringgit’s biggest annual loss since 1997. The yield on 10-year government bonds declined 10 basis points this month and two basis points on Wednesday to 3.84 percent.
The benchmark equities gauge has advanced 3.8 percent in March, and is up 1.5 percent for the year as global funds bought 4.45 billion ringgit ($1.13 billion) of the nation’s stocks in 2016 after 19.5 billion ringgit of outflows last year, according to data from MIDF Investment Bank.