Ringgit Posts Biggest Weekly Gain Since June on Factory Output

Malaysia’s ringgit posted its biggest weekly gain since June after the government reported the fastest industrial production growth in 14 months. Sovereign bonds advanced.

The currency touched a one-month high yesterday after official data on Sept. 11 showed factory output expanded 7.6 percent in July from a year earlier. The Employees Provident Fund, which manages more than $170 billion and is Malaysia’s largest state-owned fund, was a net buyer of the nation’s stocks during recent declines, Mohamad Nasir Ab. Latif, deputy chief executive, said in an interview in Kuala Lumpur yesterday.

“The ringgit’s strength this week was helped by the better than expected industrial output data,” said Wong Chee Seng, a currency strategist at Ambank Group in Kuala Lumpur. “The pension fund’s comment confirmed that local funds are buying and this will provide support to domestic bonds and stocks.”

The Malaysian currency climbed 1.2 percent this week to 3.2898 per dollar as of 4:47 p.m. in Kuala Lumpur, the most since the five days ended June 28, data compiled by Bloomberg show. The ringgit lost 0.4 percent today and touched 3.2527 yesterday, the strongest since Aug. 13.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 53 basis points, or 0.53 percentage point, to 9.44 percent this week.

Malaysia’s 10-year government bonds climbed for a seventh day. Yields on the 3.48 percent notes maturing March 2023 fell 15 basis points to 3.8 percent this week, according to data compiled by Bloomberg. The rate decreased six basis points today.

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