Ringgit surges most in nine weeks as odds slashed that Fed will raise US interest rates

A person counting the Malaysian ringgit.
A person counting the Malaysian ringgit.PHOTO: ST FILE

SINGAPORE (BLOOMBERG) - Malaysia's ringgit rose the most in more than nine weeks and bonds climbed after the weakest US jobs numbers in six years prompted investors to slash bets for a Federal Reserve interest-rate increase.

The currency rallied 1 per cent to 4.1025 per US dollar as of 10:05 am in Kuala Lumpur after US payrolls on Friday showed employers created 38,000 positions in May, the least since September 2010. That helped alleviate concern that a hike by the Fed would exacerbate outflows from emerging-market assets. A measure tracking the greenback posted its biggest slide in four months on Friday.

The ringgit advanced the most since March 30 on Monday as the employment figures spurred speculation the world's largest economy isn't strong enough to withstand higher rates just now. Fed Chair Janet Yellen speaks later in the day as bets for a June move have all but disappeared, while the odds of a July increase sank to 27 per cent from 55 per cent before the jobs report, futures show.

"I think the Malaysian ringgit will do quite nicely - and other Asian currencies will do quite well - in this environment where the dollar has got destroyed and market probability for Fed tightening has come back quite sharply," said Chris Weston, chief market strategist at IG Ltd. in Melbourne.

A rebound in crude prices should also provide support for the ringgit, which is Asia's worst-performing currency this quarter amid a political scandal hanging over Prime Minister Najib Razak. Brent rose and hovered around US$50 a barrel on signs a supply glut in the US is easing. Malaysia is the region's only major net oil exporter.

The FTSE Bursa Malaysia KLCI Index of shares rose 0.3 per cent for a fourth day of gains. The three-year bond yield fell six basis points to a two-week low of 3.23 per cent, according to stock exchange prices. The 10-year yield slid seven basis points to 3.88 per cent.