KUALA LUMPUR (BLOOMBERG) - The ringgit rose the most in eight weeks as speculation China intervened to stem the yuan's plunge helped calm markets following a six-day slide in Malaysia's currency.
The ringgit rebounded 0.8 per cent to 4.0075 per US dollar as of 8:39am on Thursday (Aug 13) in Kuala Lumpur, data from local banks compiled by Bloomberg show.
Against the Singapre dollar, the Malaysian unit strengthened to 2.865 per Singdollar as at 9:30am. It hit an all-time low of 2.888 against the Singdollar on Tuesday.
The ringgit dropped 2 per cent on Wednesday in the biggest loss since 1998 and reached a 17-year low.
A surprise devaluation of the yuan on Tuesday spurred the steepest descent in China's currency since the official and market exchange rates were unified in 1994, spurring a global sell off from currencies, to stocks and commodities. Intervention by the People's Bank of China late on Wednesday shored up market sentiment, according to Bank of Singapore Ltd.
"Overall we've seen the dollar strength being pared back and that benefited the ringgit," said Sim Moh Siong, a currency strategist at Bank of Singapore. "There's some sense of relief that perhaps the situation will not be out of control."
The dollar's 14-day relative-strength index against the ringgit climbed to 92 on Wednesday, when it was above 70 for an eighth day, the level that signals to some traders the greenback was set to reverse direction. It was at 80 on Thursday.