Ringgit Gains on Waning Dollar Demand as 1MDB Plans Loan Payment

Malaysia’s ringgit rose the most in a week after disappointing U.S. retail sales damped dollar demand and the planned repayment of an outstanding loan by the state investment company boosted sentiment.

The currency halted a four-day loss as crude prices extended gains, easing concern that export earnings will deteriorate for Asia’s only major oil exporter. The nation’s dollar bonds advanced as 1Malaysia Development Bhd., which has been mired in controversy because of rising debt, was said to be repaying a 2 billion ringgit ($559 million) loan Friday.

The ringgit’s gain was due to “the dollar weakening and the 1MDB resolution for now,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “U.S. retail sales were lower than expected.”

The ringgit strengthened 0.7 percent, the most since Feb. 6, to 3.5795 against the greenback in Kuala Lumpur, according to data compiled by Bloomberg. That trimmed the week’s loss to 0.9 percent. The Bloomberg Dollar Spot Index fell for a second week.

The currency is still Asia’s worst performer in the past three months amid the slump in crude. It dropped to 3.6375 a dollar in January, the weakest since 2009. The government has raised its budget-deficit target and cut its 2015 economic growth forecast as Brent trades at its weakest level since 2009.

Malaysia plans to tap the global Islamic bond market for the first time in almost four years, three people familiar with the matter said Thursday. The yield on the government’s dollar sukuk maturing in 2016 dropped three basis points to 1.39 percent, data compiled by Bloomberg show. The yield on the 2021 notes fell four basis points, or 0.04 percentage point, to 2.97 percent.

The Southeast Asian economy expanded 5.8 percent in the fourth quarter from a year earlier, quickening from 5.6 percent in the previous three months and exceeding the 5 percent median estimate in a Bloomberg survey, official data showed Thursday. Full-year growth was 6 percent, compared with 4.7 percent in 2013 and beating the 5.9 percent forecast. It was the fastest pace since 2010.

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