Ringgit jumps 0.7% to three-week high on oil rally

Malaysia's ringgit rose to a three-week high on Thursday (June 9) after crude prices rallied more than 2 per cent overnight to levels not seen since October.
Malaysia's ringgit rose to a three-week high on Thursday (June 9) after crude prices rallied more than 2 per cent overnight to levels not seen since October.PHOTO: REUTERS

KUALA LUMPUR (BLOOMBERG, REUTERS) - Malaysia's ringgit rose to a three-week high on Thursday (June 9) after crude prices rallied more than 2 per cent overnight to levels not seen since October.

The currency climbed 0.7 per cent to 4.0347 per US dollar as of 8.18am in Kuala Lumpur and reached 4.0303, the strongest since May 18, prices from local banks compiled by Bloomberg show.

Against the Singapore dollar which also rose against the greenback, the ringgit weakened to 3.0057 per Singdollar, down 0.46 per cent from its close on Wednesday of 2.9915.

Brent crude advanced above US$52 a barrel, bolstering the outlook for Malaysia as Asia's only major net oil exporter.

Malaysia derives about a fifth of government revenue from oil-related sources. The nation loses RM450 million for every US$1 drop in oil, Prime Minister Najib Razak said in April.

Other Asian commodity-linked and emerging-market currencies also strengthened against the US dollar amid mounting speculation the Federal Reserve will hold off on raising interest rates until later in the year ater weak jobs data.

A revival in raw materials is also burnishing sentiment, with oil driving the Bloomberg Commodity Index to an almost eight-month high, back into bull-market territory. Risk assets are gaining despite the World Bank cutting its outlook for global growth in 2016, as traders bet policy support will prevent the world economy from falling back into a concerted downturn.

The yen added 0.2 per cent to 106.80 per dollar after gaining 0.5 per cent over the previous two sessions. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, slipped 0.1 per cent in a third day of losses early on Thursday. The kiwi soared as much as 1.8 per cent to a one-year high of 71.39 US cents after the central bank refrained from cutting rates and said it expects inflation to accelerate. The Aussie climbed 0.4 per cent to 74.99 US cents, while the Korean won rose 0.5 per cent with economists predicting the seven-day repurchase rate will be held at 1.5 per cent.