Ringgit Completes Best Week in a Month as Global Selloff Eases

Malaysia’s ringgit had its biggest weekly advance in almost a month and government bonds rose as a global selloff in emerging-market assets abated.

The currency rebounded from the weakest level in more than three years as exchange rates from the Polish zloty to the Argentine peso rallied. Malaysia reported today that both exports and imports beat economists’ forecasts in December, while the trade surplus was 9.5 billion ringgit ($2.9 billion), near a 20-month high of 9.7 billion ringgit in November.

“The tensions have eased,” said Sean Yokota, the head of Asian strategy at Skandinaviska Enskilda Banken AB in Singapore. “People are paying attention to the ramifications of those with better fundamentals in emerging markets.”

The ringgit strengthened 0.6 percent from Jan. 30 to 3.3300 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. The weekly gain was the biggest since the period ended Jan. 10. The currency declined 0.2 percent today. Malaysian financial markets were shut Jan. 31 and Feb. 3 for the Chinese New Year holidays.

The currency touched 3.3511 on Feb. 4, the lowest level since May 2010. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 28 basis points, or 0.28 percentage point, this week and 10 basis points today to 7.60 percent.

Export Growth

Malaysian exports climbed 14.4 percent in December from a year earlier, the biggest increase since October 2011 and more than the median estimate of 10 percent in a Bloomberg survey. Imports rose 14.8 percent, accelerating from 6.4 percent in November, and exceeding the predicted 8.2 percent.

Current-account figures for the fourth quarter are due to be reported on Feb. 12. The surplus was 9.8 billion ringgit in the three months through September, compared with 2.6 billion ringgit in the second quarter, according to official data.

The trade data will support the currency, although gains will be capped as the “market will not push it too far” ahead of U.S. non-farm payrolls data tonight, Khoon Goh, a Singapore-based strategist at Australia & New Zealand Banking Group Ltd., said in an interview today.

U.S. employers probably added 180,000 jobs last month, compared with 74,000 in December, a Bloomberg survey shows.

Malaysian government bonds rose this week, with the yield on the 3.26 percent notes due March 2018 declining eight basis points from Jan. 30 to 3.70 percent, data compiled by Bloomberg show. The yield fell one basis point today.

Malaysian domestic bond issuance will probably decline to 84 billion ringgit this year from 91 billion ringgit in 2013, and the debt market could see some relief in April when some sovereign notes are redeemed, Morgan Stanley analysts including London-based Simon Waever wrote in a Feb. 5 research note.

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