The Malaysian ringgit surged by the fastest pace in over two weeks after U.S. jobs report lagged projections; lowering speculation the Federal Reserve may increase interest rates soon.
The ringgit rose 0.3 percent, the fastest gain since July 17, to trade at 3.2020 per dollar in Malaysia. The ringgit’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign price to options, plunged 0.03 percentage point or three basis points, to 5.59 percent.
“The data from the U.S. labor market was weaker than expected and it reduced fears that the Fed will move much faster on raising interest rates,” Dariusz Kowalczyk, a Hong Kong-based senior strategist at Credit Agricole SA in Hong Kong, told Bloomberg.
US employers boosted their payrolls with 209,000 employees in July, compared with 298,000 in June. The Fed, while acknowledging the data, said that there is still some slack in the labor market that needs to be used up before it decides whether it is time to increase interest rates.
Analysts in a Bloomberg survey estimate that Malaysian exports increased 14 percent in the year through June. The official report is expected to be released on August 6. Should the report match or exceed the estimates, this would be the 12th month of export growth. The survey expects the trade surplus to have increased to 5.97 billion ringgit ($1.9 billion) compared with 5.72 billion ringgit a month earlier.
The yield on Malaysia’4.181 percent bonds that mature on July 2024 remained unchanged at 3.90 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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