Ringgit Gains First Time in a Week on U.S. Data, Japan Optimism

The ringgit climbed for the first time in a week after signs of economic improvement in two of Malaysia’s major export markets spurred demand for riskier assets. Government bonds were little changed.

The MSCI Asia Pacific Index of stocks snapped a two-day loss after housing starts in the U.S. jumped to the highest level in almost five years and the International Monetary Fund raised its 2013 economic-growth forecast for Japan to 1.6 percent from 1.2 percent. The North Asian nation is Malaysia’s second-biggest overseas market while the U.S. is No. 4.

“The improvement in the U.S. data and the higher Japanese GDP forecast are helping to attract funds to Asia,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. “The Malaysian currency will hover at current levels in the short term.”

The ringgit was up 0.5 percent at 3.0250 per dollar as of 4:48 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell four basis points, or 0.04 percentage point, to 7.09 percent.

Inflation in Malaysia accelerated to 1.6 percent in March from 1.5 percent in February, matching the median forecast of 19 economists surveyed by Bloomberg, official data showed today.

The ringgit may weaken to 3.12 by year-end as fund inflows into government bonds slow due to quickening consumer-price gains, Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore, said yesterday.

The yield on the 3.26 percent sovereign notes due March 2018 was little changed at 3.16 percent, data compiled by Bloomberg show.

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