The Malaysia’s ringgit posted its biggest monthly winning streak since 2012 on the basis that foreign inflows will accelerate on improving economic outlook.
The currency has advanced 0.5 percent since June 30, its third consecutive monthly gain, to trade at 3.1957 per dollar in Malaysia. This makes it the third-best gainer after the Indonesia’s rupiah and Thai baht. The ringgit slumped 0.4 percent on Thursday, the most since June 2.
“I’m still slightly bullish on the ringgit on the nation’s fundamentals, Bank Negara’s prospective tightening and China’s recovery,” Gao Qi, a Singapore-based markets strategist at Royal Bank of Scotland Group Plc, told Bloomberg. “External liquidity remains accommodative.”
The ringgit’s 1-month implied volatility, which measures the expected shifts in the exchange rate used to assign price to options, increased 0.32 percentage point or 32 basis points, to 5.14 percent. The rate was up 10 basis points today.
Strong economic indicators have fuelled the Malaysia’s currency appreciation this month. Official reports released in July indicated that factory output and exports in May increased 6 percent and 16.3 percent, respectively, beating market expectations. Malaysia had a current-account surplus of 19.8 billion ringgit ($6.2 billion) in the first three months of 2014, the largest surplus since the fourth quarter of 2012, revealed a May 16 report.
The Finance Ministry disclosed on July 23 that it expects the economy to expand by 5 percent to 5.5 percent this year, up from 4.7 percent, while the central bank forecasts a growth of 4.5 percent to 5.5 percent.
The portfolio of Malaysian corporate and sovereign debt held by global funds has increased 5.7 percent to a new high of 249 billion ringgit in May from a month ago. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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