Ringgit Rallies to a Four-Month High as Investor Funds Shift to Emerging Markets

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Ringgit Rallies to a Four-Month High as Investor Funds Shift to Emerging MarketsThe Malaysian ringgit surged to its highest level in four months as investors speculated that more funds will flow to emerging markets as they outpace the growth of developed markets.

The ringgit was up 0.7 percent, its highest since December 9 to stand at 3.2484 per dollar as of 3:16 p.m. in Kuala Lumpur. It also hit 3.2451, its highest level since December 17.

The Bloomberg-JP Morgan Asia Dollar Index, which analyzes 10 Asian currencies versus the dollar, was up 0.2 percent at 115.50. The one-month implied volatility of the ringgit, which measures the expected shifts in the exchange rate used to assign prices to options, plunged 0.2 percentage point, or 20 basis points, to 6.36 percent.

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The ringgit has been boosted from rising Malaysian exports and speculation that factory output will grow, though it may weaken if U.S. further cuts its monetary stimulus, Ho Woei Chen, an economist at United Overseas Bank Ltd in Singapore told Bloomberg.

The country saw its exports surge 12.3 percent in February up from a year ago, beating the median forecast of a 10.6 percent gain by Bloomberg analysts.

Analysts expect a government report that will be released on April 10 to indicate that industrial output rose 6.2 percent in February, the steepest growth since July 2013, based on a Bloomberg poll of economists.

Malaysia’s economy is expected to expand 4.5 percent to 5.5 percent this year, from 4.7 percent in 2013, according to a March 19 report by the nation’s central bank. The yield on its sovereign bonds that mature in July 2024 plunged one basis points to 4.11 points, its third consecutive day of declines.

To contact the reporter of this story; Yashu Gola at Yashu@forexminute.com