Ringgit heads for biggest 3-day rally in 2 years

A customer counts her ringgit notes outside a money changer.
A customer counts her ringgit notes outside a money changer. PHOTO: REUTERS

KUALA LUMPUR (BLOOMBERG) - Malaysia's ringgit headed for its biggest three-day rally in two years as trade data beat estimates and Brent crude extended its advance above US$50 a barrel, helping shore up revenue for Asia's only major oil exporter.

Brent crude rose 5.4 per cent overnight and was adding to those gains on Wednesday (Oct 7), with the ringgit finding support from losses in the US dollar as bets for a 2015 US interest-rate increase fade. Malaysia's trade surplus widened to the highest in almost a year in August, the government reported Wednesday.

"The ringgit is benefiting from a rebound in oil prices," said Khoon Goh, a senior strategist at Australia & New Zealand Banking Group Ltd. in Singapore. "The better-than expected export and trade surplus resulted in further gains."

The ringgit appreciated 1.8 per cent to two-week high of 4.2958 per US dollar as of 12:38 pm in Kuala Lumpur, taking its advance this week to 2.7 per cent, according to prices from local banks compiled by Bloomberg.

A gauge of the dollar tracking the US currency against 10 major counterparts fell the most in six weeks in New York.

Against the Singapore dollar, the ringgit has strengthened from record lows around the 3.13 level seen last month. It was trading at 3.0117 per Singdollar as of 2:05 pm.

Brent crude has still more than halved from last year's high, helping make the ringgit the third-worst performer among 24 emerging-market currencies tracked by Bloomberg this year with a 19 per cent loss.

Earlier Wednesday, trade date showed Malaysian exports rose 4.1 per cent from a year earlier and imports unexpectedly contracted 6.1 per cent, compared with forecast gains in a Bloomberg survey of 1.3 per cent and 1.7 per cent, respectively. The trade surplus widened to RM10.2 billion, the biggest gap since November 2014 and beating the RM4.1 billion predicted.

Bets for an October US rate increase are now only 8 per cent and 36 per cent for December, the last two meetings of 2015, futures show. March is starting to look the most likely for the first move, with odds of 57 per cent compared with January's 43 per cent.

"Crude oil prices were higher overnight and that spilled over into commodity currencies," said Sim Moh Siong, a foreign- exchange strategist at Bank of Singapore Ltd. "The market continues to expect the Federal Reserve to delay the lift-off, and that's benefiting emerging-market currencies."