Ringgit Leads Gains in Emerging Currencies as Crude Oil Ralliesby and
Malaysia’s ringgit led gains in emerging-market currencies after OPEC reached a preliminary agreement to reduce crude production, improving the outlook for the energy exporter.
The ringgit jumped the most in a week as trading started in Asia, while South Korea’s won strengthened for a third day as the nation counts oil producers as the destination for much of its overseas sales. The agreement by the Organization of Petroleum Exporting Countries bolstered developing-nation stocks as demand for higher-yielding assets increased. Brent crude surged 5.9 percent Wednesday.
“The Malaysian ringgit is playing catch up given that all the other oil-related currencies from Norwegian Krone to Russian ruble have surged overnight on news that the OPEC is converging on plans to cut oil production,” said Vishnu Varathan, an economist at Mizuho Bank Ltd. in Singapore. “The knee-jerk jump in Brent of some 6 percent is transmitting to oil related currencies.”
The ringgit advanced 0.6 percent to 4.1165 per dollar as of 9:10 a.m. in Hong Kong, poised for its its biggest one-day gain since Sept. 22. The won appreciated 0.3 percent to 1,094.05 per dollar after reaching 1,091.50, the strongest level since Sept. 8.
OPEC agreed Wednesday in Algiers to reduce production to a range of 32.5 million to 33 million barrels a day. Saudi Arabia and Iran had signaled before the meeting that an agreement was unlikely.
“Market sentiment has improved,” Ha Keon-hyeong, an economist at Shinhan Investment Corp. in Seoul, wrote in a research note. Further gains in the won beyond 1,090 per dollar will be limited by concern the authorities may intervene to limit its advance, he wrote.
South Korean bonds were little changed, with the three-year note yield at 1.31 percent and 10-year at 1.48 percent.