Ringgit Rises to Nine-Month High as GDP, Surplus Top Forecasts

Malaysia’s ringgit climbed to a nine-month high after the economy expanded at the fastest pace in six quarters and current-account data beat estimates.

Gross domestic product rose 6.4 percent in the second quarter from a year earlier, according to data from the central bank today. That exceeded the 6.2 percent increase in the first three months and the 5.8 percent median estimate in a Bloomberg survey. The current-account surplus was 16 billion ringgit ($5.1 billion), surpassing the 11.4 billion ringgit forecast. The ringgit is Asia’s best performer in the past three months.

The currency appreciated 0.8 percent to 3.1537 per dollar in Kuala Lumpur and touched 3.1532 earlier, the strongest since Oct. 31, data compiled by Bloomberg show. It rose 1.7 percent from Aug. 8, the biggest five-day gain since Sept. 20. The ringgit climbed 2.3 percent in the past three months.

“The stronger-than-expected macro numbers strengthen the case for another policy rate increase,” said Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur. “That’s what is driving the interest in the ringgit.”

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. One-year interest-rate swaps gained three basis points to 3.77 percent, signaling investors anticipate more increases in the next 12 months. The next meeting is due Sept. 18.

One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, dropped five basis points, or 0.05 percentage point, to 5.26 percent today. It declined 83 basis points for the week.

Bonds Drop

The yield on Malaysia’s 10-year government bonds rose two basis points today and four basis points this week to 3.91 percent, according to data compiled by Bloomberg.

Overseas investors turned net sellers of Malaysian stocks in July for the first time in four months, with 300 million ringgit flowing out, stock exchange data show. Global funds cut holdings of the nation’s local-currency debt by 0.5 percent to 248.2 billion ringgit in June from a record 249.5 billion ringgit in May, according to the most-current central bank figures.

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