Ringgit Advances a Third Day After Trade Surplus Beats Estimate

Malaysia’s ringgit strengthened for a third day, its longest winning streak since November, after the nation reported its biggest trade surplus in 20 months.

Exports topped imports by 9.7 billion ringgit ($3 billion) in November, the widest gap since March 2012, government data released today showed. The median forecast of economists in a Bloomberg survey was for an 8 billion ringgit excess.

“The market takes comfort in looking at the trade surplus, which is wider than expected,” said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia. “That’s something which is always good.”

The ringgit gained 0.2 percent to 3.2766 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. That pared its loss in the past month to 1.3 percent. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined 31 basis points, or 0.31 percentage point, to 7.32 percent.

Malaysia targets to grow its exports by as much as 4 percent this year by tapping new markets in the Middle East, South Asia and Africa, the Malaysian Reserve reported today, citing the Trade Ministry’s Secretary General Rebecca Fatima Sta Maria. Shipments increased 1.4 percent in the first 11 months of 2013 from a year ago, official data show.

Malaysia’s overseas sales grew 6.7 percent in November from a year earlier, short of the 10.3 percent median estimate in a Bloomberg survey and a 9.6 percent gain in October.

Bonds, Swaps

The yield on the 3.48 percent sovereign notes due March 2023 was steady at 4.16 percent after reaching 4.19 percent on Jan. 6, the highest since the debt was sold in March last year, according to data compiled by Bloomberg. Ten-year U.S. Treasury rates were at 2.96 percent after touching a July 2011 high of 3.05 percent Jan. 2.

Five-year credit-default swaps on Malaysian debt fell four basis points to 112 in New York, after reaching a two-month high of 116 yesterday, according to data provider CMA. Credit default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Export growth in China, Malaysia’s biggest overseas market, probably slowed to a three-month low of 5 percent in December, while the trade surplus narrowed to $32.2 billion from $33.8 billion the previous month, according to median estimates in Bloomberg surveys before data due Jan. 10.

“The risks of emerging-market Asia are being priced in vis-a-vis U.S. Treasury returns,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. “The desperation for seeking high yields is diminishing as U.S. yields increase. There may be a partial pricing in of China risks.”

China’s aggregate financing was 7.1 trillion yuan ($1.2 trillion) in the second half of last year, based on published figures and the median estimates of economists before data due in coming days. That would be about 931 billion yuan less than in the July-to-December period of 2012, the largest drop in data going back to 2002.

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