KUALA LUMPUR (BLOOMBERG) - Malaysia's ringgit led gains in emerging-market currencies on Thursday (May 26) after Brent crude rose above US$50 (S$67) a barrel for the first time since November, bolstering sentiment for Asia's only major net oil exporter.
Brent climbed 0.7 per cent, taking its three-day gain to 3.6 per cent, as a drop in US stockpiles accelerated the commodity's rebound from a 12-year low.
The rise in oil prices comes as Asian markets seem to be growing more comfortable with the prospect of higher US interest rates. Developing-nation exchange rates were also aided by a second day of declines for the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers.
"The ringgit's strength was supported by oil-price gains, a mild retreat in the dollar and supportive risk sentiment," said Mr Christopher Wong, a foreign-exchange strategist at Malayan Banking Bhd in Singapore. "The correlation between oil and ringgit remains significant."
The ringgit appreciated 0.5 per cent to 4.0825 per US dollar as of 11.15am in Kuala Lumpur, set for its biggest two-day advance in more than a month, according to prices from local banks compiled by Bloomberg. The gains helped pare its decline this month to 4.5 per cent, which is still the worst performance in Asia.
Against the Singapore dollar, the ringgit strengthened, trading up 0.3 per cent at 2.9661 per Singdollar.
Malaysia derives about 22 per cent of its revenue from energy-related sources and the government estimates the South-east Asian economy loses RM450 million (S$151.9 million) for every US$1 drop in oil.