Energy-linked currencies including ringgit rise after surprise Opec move to cut crude output

Malaysian ringgit banknotes of various denominations.
Malaysian ringgit banknotes of various denominations.PHOTO: BLOOMBERG

TOKYO (AFP) - Energy-linked currencies including Malaysia's ringgit led a rally in high-yielding units on Thursday (Sept 29) after Opec's surprise deal to cut oil output sent crude prices soaring.

Officials at the Organisation of Petroleum Exporting Countries, meeting in Algiers, said they had reached an agreement to reduce production, sparking a more than 5 per cent rally in crude.

The news set off a rally in risk assets, with global stocks and currencies surging.

In early Asian trade the oil-dependent ringgit rose 0.6 per cent, the Australian dollar added 0.4 per cent and the Canadian dollar climbed more than 1 per cent.

Optimism also lent support to other units as investors left safe-haven currencies. The South Korean won and Indonesian rupiah each added 0.1 per cent against the greenback and the New Zealand dollar put on 0.8 per cent.

The US dollar also slipped against the euro, with the single currency buying US$1.1230 from US$1.1217 in New York on Wednesday, while it also gained to 113.78 yen from 112.96 yen.

However, the US dollar climbed to 101.37 yen in Asian trade, up from 100.70 yen in New York.

But analysts warned the euphoria over the cuts would not likely last as crude markets remain heavily supplied.

"While today's oil price movement are supportive of (the dollar against the yen), it is unlikely to be a dominant force as the oil markets are still dealing with major supply concerns," said Mr Stephen Innes, senior trader at OANDA.

Federal Reserve boss Janet Yellen's reiteration to Congress that most of the bank's policy board expects a rate rise by December gave little support to the US currency.

"Markets aren't likely to take seriously Fed protestations that the November meeting is live," Mr Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, told Bloomberg News.