Ringgit Halts Losses as U.S. Data May Delay Fed’s Rate Increase

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Malaysia’s ringgit snapped a seven-day loss after disappointing U.S. factory data fueled speculation the Federal Reserve will delay increasing interest rates.

An overnight rally in Brent crude also bolstered demand for the ringgit, which is susceptible to commodity price moves because the nation is a net oil exporter. A report on Friday may show its overseas shipments contracted in April for a third month this year. The ringgit led declines among Asia’s emerging-market currencies over the past month on bets higher U.S. rates will damp demand for assets in developing countries.

“Weak U.S. factory orders are supporting the ringgit,” said Masashi Murata, vice president at Brown Brothers Harriman & Co. in Tokyo. “The rise in oil in the New York session also supports the ringgit.”

The currency rose 0.4 percent to 3.6850 a dollar in Kuala Lumpur, data compiled by Bloomberg show. It dropped 3.1 percent in the last seven days and has fallen 3 percent in the past month. While Brent crude climbed 0.9 percent Tuesday it declined 1 percent in the Asian session, causing the ringgit to pare a gain of as much as 0.8 percent.

Malaysia’s exports fell 6 percent in April from a year earlier after gaining 2.3 percent the previous month, according to the median estimate of economists in a Bloomberg survey. The trade surplus probably narrowed to 5.4 billion ringgit ($1.5 billion) from 7.8 billion ringgit.

The nation’s government bonds retreated, with the 10-year yield climbing two basis points to 3.95 percent, the highest since the notes were sold in March.

Factory orders in the world’s largest economy dropped 0.4 percent in April, missing the median estimate for a 0.1 percent decline, a report showed Tuesday. That compares with a March increase of 2.2 percent. Investors will focus on a jobs report Friday for a clearer idea of when the Fed will tighten policy.

Fed Governor Lael Brainard said the stronger dollar is hurting growth and may push back the timetable for an interest-rate increase.