Ringgit Climbs to Highest Since November on Interest-Rate Bets

The ringgit climbed to its highest level since November on bets Malaysian policy makers will raise interest rates for the first time in three years.

The currency was Asia’s best performer after Indonesia’s rupiah this week on speculation the central bank will increase benchmark borrowing costs from 3 percent on July 10. The ringgit briefly pared today’s gain after data showed the trade surplus narrowed as imports rose more than economists forecast.

“The ringgit is firmer than other Asian currencies because of expectations of an interest-rate hike,” Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur, said before the trade figures were issued. “The uptrend in exports is also supportive of the Malaysian currency.”

The ringgit strengthened 0.3 percent to 3.1860 per dollar in Kuala Lumpur and was up 0.9 percent for the week, data compiled by Bloomberg show. It rose as much as 0.5 percent earlier to 3.1805, the strongest since Nov. 20.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, advanced 16 basis points, or 0.16 percentage point, to 4.86 percent this week and was little changed today.

Eight of 10 economists surveyed by Bloomberg predict a 25 basis point increase in the policy rate next week. One-year interest-rate swaps have climbed two basis points in the past month to 3.67 percent.

Bond Holdings

The trade surplus narrowed to 5.72 billion ringgit ($1.8 billion) in May from the revised 8.74 billion ringgit in April, today’s report showed. That was less than the median forecast in a Bloomberg survey for an 8.1 billion ringgit excess.

Exports rose 16.3 percent from a year earlier, following a revised 18.7 percent increase in April. That was more than the

15.2 percent gain predicted by economists. Imports surged 11.9 percent, beating April’s 5 percent jump and the forecast 7.7 percent expansion.

Global funds boosted ownership of Malaysian government and corporate debt by 5.7 percent to a record 249.5 billion ringgit in May, the central bank reported this week.

Ten-year government bonds were little changed today, with the yield on the 4.181 percent notes maturing in July 2024 at

4.02 percent, according to data compiled by Bloomberg. The rate dropped three basis points for the week.