Ringgit Swings Between Gains, Losses as Malaysian Polls Approach
Malaysia’s ringgit swung between gains and losses after Prime Minister Najib Razak dissolved parliament, paving the way for polls that will determine if his government stays in power to continue its economic reforms.
The Election Commission will meet in a few days to announce a date for the vote, its spokesman Sabri Said said after the dissolution of the legislature today. The premier, who has opened the banking and insurance industries to more foreign investment, saw his approval rating fall to an 18-month low in February, the latest survey from the Merdeka Center for Opinion Research released Feb. 26 shows.
“One overhang was when they will hold elections and that element has been removed,” said Wong Chee Seng, a currency strategist in Kuala Lumpur at AmBank Group. “The other overhang is the results and only after this is removed will we see a stronger appreciation of the ringgit.”
The ringgit climbed 0.1 percent to 3.0842 per dollar as of 4:49 p.m. in Kuala Lumpur after declining as much as 0.3 percent earlier, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell seven basis points, or 0.07 percentage point, to 6.75 percent.
“The dissolution of parliament doesn’t take away the uncertainty in terms of how much of its majority the government can hold on to and what this means for policies,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd.
Malaysian exports probably fell 4.9 percent in February from a year earlier, after increasing 3.5 percent the previous month, according to the median estimate in a Bloomberg survey before a government report due April 5.
The yield on the 3.26 percent bonds due March 2018 held at 3.23 percent, according to data compiled by Bloomberg.
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