Ringgit Advances to Seven-Week High on Ukraine Talks, U.S. Data

Malaysia’s ringgit strengthened to a seven-week high as talks between the U.S. and Russia over the latter’s military intervention in Crimea helped ease geopolitical risk.

Secretary of State John Kerry met Russian Foreign Minister Sergei Lavrov in Paris yesterday to discuss the crisis, while European Union leaders will hold an emergency meeting today. Russian President Vladimir Putin said March 4 there was no immediate need to invade Ukraine, though he reserved the right to take military action. Reports yesterday showed U.S. service industries and jobs data missed estimates. Bank Negara Malaysia will keep its benchmark interest rate steady at a review today, according to all 23 economists surveyed by Bloomberg.

“The ringgit is stronger due to receding risks of a standoff in Ukraine,” said Khoon Goh, a strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Also weaker U.S. data led to weakness in the dollar.”

The ringgit climbed 0.3 percent, its third day of gains, to 3.2615 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.2587, the strongest level since Jan. 13. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 18 basis points, or 0.18 percentage point, to 6.79 percent, a third day of declines.

Quickening Inflation

U.S. companies added 139,000 workers in February, following a revised 127,000 gain in January that was weaker than initially reported, according to the ADP Research Institute in Roseland, New Jersey. The Institute for Supply Management’s non-manufacturing index fell to 51.6, the weakest since February 2010, the Tempe, Arizona-based group said.

Bank Negara has held the overnight policy rate at 3 percent since May 2011. It will announce its rate decision at 6 p.m. local time. Inflation accelerated to 3.4 percent in January, the fastest since October 2011, after the government increased fuel and power tariffs to trim its fiscal deficit.

Nomura Holdings Inc. sees the central bank maintaining policy today, while acknowledging the heightening inflation risk, analysts including New York-based Jeffrey Young wrote in a research note yesterday.

A report tomorrow may show Malaysia’s exports climbed 7.9 percent in January from a year earlier, after increasing 14.4 percent the previous month, according to the median estimate of economists in a Bloomberg survey.

The yield on the 3.172 percent sovereign bonds due July 2016 was steady at 3.27 percent, data compiled by Bloomberg show.

Before it's here, it's on the Bloomberg Terminal.