Ringgit Rally Best Since 2013 as Trade Data Adds to Oil Optimismby
August exports and trade surplus exceed economists' estimates
Fed rate bets below 50% for next three meetings through Jan.
Malaysia’s ringgit headed for its biggest three-day rally in two years as trade data beat estimates and Brent crude extended its advance above $50 a barrel, helping shore up revenue for Asia’s only major oil exporter.
The commodity rose 5.4 percent overnight and was adding to those gains on Wednesday, with the ringgit finding support from losses in the dollar as bets for a 2015 U.S. interest-rate increase fade. Malaysia’s trade surplus widened to the highest in almost a year in August, the government reported Wednesday.
“The ringgit is benefiting from a rebound in oil prices,” said Khoon Goh, a senior strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The better-than expected export and trade surplus resulted in further gains.”
The ringgit appreciated 1.9 percent to 4.2950 a dollar as of 1 p.m. in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It’s climbed 2.7 percent in the days, the most since September 2013, and earlier reached a two-week high of 4.2900. A gauge of the dollar tracking the U.S. currency against 10 major counterparts fell the most in six weeks in New York.
Brent crude has still more than halved from last year’s high, helping make the ringgit the fourth-worst performer among 24 emerging-market currencies tracked by Bloomberg this year with an 18 percent loss.
Exports rose 4.1 percent from a year earlier and imports unexpectedly contracted 6.1 percent, compared with forecast gains in a Bloomberg survey of 1.3 percent and 1.7 percent, respectively. The trade surplus widened to 10.2 billion ringgit ($2.4 billion), the biggest gap since November 2014 and beating the 4.1 billion ringgit predicted.
Bets for an October U.S. rate increase are now only 8 percent and 36 percent for December, the last two meetings of 2015, futures show. March is starting to look the most likely for the first move, with odds of 57 percent compared with January’s 43 percent.
“Crude oil prices were higher overnight and that spilled over into commodity currencies,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “The market continues to expect the Federal Reserve to delay the lift-off, and that’s benefiting emerging-market currencies.”
Sovereign bonds fell, with the 10-year yield rising two basis points to 4.18 percent and the five-year yield climbing five basis points to 3.80 percent, according to prices from Bursa Malaysia. The FTSE Bursa Malaysia KLCI Index of stocks was up 0.4 percent at the midday break.