Ringgit Rises With Bonds as Fed Hike Bets Subside, Oil Holds $50

  • Emerging-market stocks climb after weak U.S. payrolls
  • Najib given lifeline by opposition ahead of June by-elections

Malaysia’s ringgit rose the most in more than nine weeks and bonds climbed with stocks after the weakest U.S. jobs numbers in almost six years prompted investors to slash bets for a Federal Reserve interest-rate increase.

The currency rallied 1.2 percent to 4.0983 per dollar in Kuala Lumpur after crude prices rose above $50 a barrel, brightening the outlook for Asia’s only major net oil exporter. The currency is the region’s worst performer this quarter amid a political scandal hanging over Prime Minister Najib Razak that’s led to calls for his resignation. Opposition parties handed him a lifeline at the weekend by nominating more than one candidate for two by-elections coming in June, increasing the chances for his United Malays National Organisation to secure a majority.

“The ringgit was oversold in the last month, so short-covering post payrolls is helping the currency,” said Sue Trinh, Hong Kong-based head of Asian foreign-exchange strategy at Royal Bank of Canada.

‘Quite Nicely’

Monday’s advance in the ringgit was the biggest since March 30. The currency weakened to 4.1757 per dollar last Thursday, the lowest level since March 1, and has lost 4.9 percent this quarter.

The FTSE Bursa Malaysia KLCI Index of shares rose 0.8 percent on Monday, the biggest increase in two months. The three-year bond yield fell one basis point to 3.25 percent and the 10 year slid five basis points to 3.89 percent, according to stock exchange prices.

U.S. payrolls on Friday showed employers created 38,000 positions in May, the fewest since September 2010. That helped alleviate concern that a Fed hike would exacerbate outflows from emerging markets and caused the biggest slide in four months for a measure tracking the greenback. Fed Chair Janet Yellen speaks later in the day as bets for a June move have all but disappeared, while the odds of a July increase sank to 27 percent from 55 percent before the jobs report, futures show.

“I think the Malaysian ringgit will do quite nicely -- and other Asian currencies will do quite well -- in this environment where the dollar has got destroyed and market probability for Fed tightening has come back quite sharply,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne.

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