Ringgit Gains a Third Week as Oil Rally Offsets Fed Rate Bets

Malaysia’s ringgit rose for a third week as a rally in crude helped shield the region’s only major oil-exporter from bets the U.S. will raise interest rates.

The ringgit was set for its best weekly run of gains since July as Brent crude headed for the biggest five-day advance in six weeks. The commodity climbed 3.4 percent from April 3, easing concern that the government’s finances will deteriorate. The halving in the oil price since June has made the ringgit Asia’s worst-performing currency in the past three months.

“The ringgit is performing better compared to its regional peers this week partly on account of a slight recovery in oil,” said Khoon Goh, Singapore-based senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. “There is also likely some position adjustment as the market had been bearish on the ringgit for a while.”

The ringgit strengthened 0.6 percent from April 3 to 3.6465 a dollar as of 12:25 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It’s appreciated 2.4 percent in three weeks and climbed to a one-month high of 3.6212 on April 6. It declined 0.4 percent Friday.

Former premier Mahathir Mohamad’s calls for Prime Minister Najib Razak to resign over alleged mismanagement of the economy sent the ringgit lower Friday, said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore.

Najib said in an interview on national television Thursday that he will remain leader for as long as he has the mandate of his party and citizens. Mahathir said this month that Najib has lost the trust of Malaysians.

Bonds Fall

One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, fell 1.27 percentage point for the week to 9.32 percent, headed for the biggest drop since 2013.

The Bloomberg-JPMorgan Asia Dollar Index fell as futures traders increased wagers for a June Federal Reserve rate increase to 57 percent Friday from 55 percent on Monday. The odds for a move in September climbed to 78 percent from 75 percent.

Malaysia’s factory output increased 5.2 percent in February from a year earlier, after gaining 7 percent the previous month, official data showed Friday. The median estimate in a Bloomberg survey was for a 5.1 percent advance.

Government bonds fell this week, with the yield on the three-year notes climbing three basis points, or 0.03 percentage point, to 3.34 percent, data compiled by Bloomberg show. That’s the first five-day advance since Feb. 13.

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