Malaysia’s ringgit appears set to end its two-weak losing streak after the U.S. Federal Reserve revealed it will keep interest rates low in order to stimulate local economic growth.
The ringgit advanced 0.1 percent to 3.2650 per dollar as of 10:32 a.m. in Kuala Lumpur this week, based on Bloomberg data. The country’s financial markets were shut on Thursday for a national holiday.
“Asian currencies such as the ringgit are gaining because of the perception that the Fed will keep monetary policy accommodative,” Saktiandi Supaat, a Singapore-based head of foreign-exchange research at Malayan Banking Bhd told Bloomberg. “Unless there are major surprises, Asian currencies are likely to trade within a narrow range against the dollar.”
The Bloomberg Dollar Spot Index, which monitors the dollar against 10 major peers, plunged the steepest in three weeks on Wednesday after the Federal Reserve announced that it will retain its benchmark borrowing rate near zero for “considerable time” after the stimulus program is halted.
The one-month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, plunged 0.24 percentage point, or 24 basis points, to 6.34 percent in this week.
Foreign investment in Malaysian debt remained slightly unchanged at 235 billion ringgit ($72 billion) in March from February, reported the central bank on Wednesday. Economists predict Malaysian exports to have expanded 11.5 percent in March from a year ago, based on a Bloomberg survey. The data is slated to be released on May 7.
The Federal Reserve reduced its monthly bond purchases by $10 billion for the fourth consecutive month to $45 billion. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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