Malaysian ringgit defies drop in Asian currencies on oil's rally

Malaysian ringgit banknotes of various denominations are arranged for a photograph in Tokyo, Japan.
Malaysian ringgit banknotes of various denominations are arranged for a photograph in Tokyo, Japan.PHOTO: BLOOMBERG

KUALA LUMPUR (BLOOMBERG) - Malaysia's ringgit strengthened on Tuesday (Oct 4), bucking a decline in Asian currencies, as an overnight rally in energy prices offset the prospect of a US interest-rate increase as soon as next month.

The ringgit climbed 0.3 per cent to 4.1240 per US dollar as of 9:17 am in Kuala Lumpur,  according to prices from local banks compiled by Bloomberg, as Malaysian financial markets resumed trading after a holiday on Monday.

The ringgit also strengthened against the Singapore dollar, rising 0.5 per cent to 3.0171 per Singdollar at 10:17am from Monday's close.

Brent crude surged to a six-week high on Monday, providing some reprieve to the ringgit after its biggest monthly drop since May last month. Malaysia is the only net exporter of oil among Asia's major economies and derives about a fifth of government revenue from energy-related sources.

A gauge of the dollar strengthened for a second day and Treasuries fell after a report showed US manufacturing expanded in September, backing the case for the Federal Reserve to raise rates.

"Dollar strength and supported US Treasury yields off the back of better-than-expected US data are reminding markets that November remains a live meeting," said Christopher Wong, a foreign-exchange strategist at Malayan Banking Bhd in Singapore. "Oil price gains are supporting the ringgit."

With additional information from the Straits Times