Ringgit Climbs to Two-Week High as U.S. Retail Sales Disappoint

Malaysia’s ringgit climbed to a two-week high as disappointing U.S. retail sales added to the case for the Federal Reserve to keep interest rates low, bolstering demand for emerging-market assets.

The currency rose for a fourth day in its longest winning streak in almost six weeks before second quarter gross domestic product and current-account data tomorrow. Factory output figures issued this week that beat forecasts and prospects Malaysia’s central bank will increase interest rates again next month are supportive for the ringgit, according to Australia & New Zealand Banking Group Ltd.

“Asian currencies are firmer today because of the weaker-than-expected U.S. retail sales,” said Khoon Goh, senior foreign-exchange strategist at Australia & New Zealand Banking in Singapore. “There’s no domestic news to drive the ringgit today but tomorrow’s GDP release will be important.”

The currency gained 0.4 percent to 3.1795 per dollar in Kuala Lumpur, data compiled by Bloomberg show. It earlier reached 3.1760, the strongest level since July 30. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined 19 basis points, or 0.19 percentage point, to 5.34 percent.

Malaysia’s economy expanded 5.8 percent in the second quarter, after growth of 6.2 percent in the first three months, according to the median forecast of economists surveyed by Bloomberg. The current-account surplus eased to 11.4 billion ringgit ($3.6 billion) from 19.8 billion ringgit, a separate survey showed.

Factory Output

The central bank raised its benchmark policy rate for the first time in three years by 25 basis points to 3.25 percent on July 10. The next meeting is due Sept. 18. The nation’s factory output increased 7 percent in June from a year earlier, beating the 5 percent forecast by economists, official data showed on Aug. 11.

The yield on Malaysia’s 10-year government bonds increased one basis point to 3.89 percent, according to data compiled by Bloomberg.

U.S. retail sales were little changed in July, compared with the median 0.2 percent increase predicted in a Bloomberg survey, official figures showed yesterday.

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