Ringgit Advances to One-Month High After Chinese Lending Surges

The ringgit touched the strongest level in a month after a report showed lending in China, Malaysia’s biggest trading partner, surged to a record.

The Southeast Asian nation’s benchmark stock index climbed the most in a week today after China said Feb. 15 that aggregate financing, the broadest measure of credit, rose to 2.58 trillion yuan ($425 billion) in January, surpassing the previous high of 2.54 trillion yuan in the same month in 2013. Malaysia’s fourth-quarter economic growth accelerated to 5.1 percent from 5 percent in the preceding three months, according to official data released last week.

The ringgit gained 0.4 percent to 3.2945 per dollar in Kuala Lumpur, paring its loss this year to 0.6 percent, according to prices compiled by Bloomberg. It reached 3.2863 earlier, the strongest level since Jan. 14. The currency rallied 0.7 percent last week.

“Asian currencies are stronger because of the improving sentiment in China,” said Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur. “This will be a perfect week for the ringgit as investors are also digesting the good flow of macro-economic data in the nation.”

The Malaysian government’s budget shortfall narrowed to 3.9 percent of gross domestic product last year from 4.5 percent in 2012, according to the central bank’s quarterly bulletin released last week. The current-account surplus widened to 16.2 billion ringgit ($4.9 billion) in the last three months of 2013 from 9.8 billion ringgit in the previous period, a report showed last week.

One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, increased 18 basis points, or 0.18 percentage point, to 6.68 percent.

Ten-year government bonds advanced. The yield on the 4.181 percent notes due July 2024 declined two basis points to 4.11 percent, the lowest since the debt was sold in January, data compiled by Bloomberg show.

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