KUALA LUMPUR • Malaysia's ringgit climbed the most in a month and led gains in Asia as demand for the US dollar waned after the Federal Reserve provided a clearer picture on the timing of its interest-rate increase.
The Fed's October minutes issued this week gave the strongest signal yet that the central bank will raise rates next month, with the wording for a gradual pace of future tightening supporting demand for emerging-market assets.
Brent crude stabilised after falling to a two-month low, helping boost sentiment for the ringgit.
The Malaysian currency is the worst performer in Asia this year, amid a slide in energy prices that has cut earnings for the region's only major net oil exporter.
For the ringgit in particular, as an underperformer this year, it is a bigger beneficiary of reduced near-term pressure from the Fed and China factors.
STRATEGIST DUSHYANT PADMANABHAN, from Nomura Holdings in Singapore, on the ringgit's recent strong gains
"For the ringgit in particular, as an underperformer this year, it is a bigger beneficiary of reduced near-term pressure from the Fed and China factors," said Mr Dushyant Padmanabhan, a strategist with Nomura Holdings in Singapore.
The ringgit strengthened 1.4 per cent to 4.2845 per US dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It rose to a two-week high of 4.2577 earlier and has posted the biggest five-day advance since Oct 9.
The ringgit also jumped 1.4 per cent against the Singapore dollar, trading at 3.0250 per Singdollar in early afternoon from its close of 3.0693 on Thursday.
At its lowest trading close this year, the ringgit fell to 3.1351 against the Singdollar on Sept 30.
The ringgit may also have received a fillip from news that 1Malaysia Development Berhad is nearing an agreement to sell control of its power business to a Chinese-led group.
Indonesia's rupiah strengthened 0.9 per cent to 13,658 and Thailand's baht climbed 0.4 per cent to 35.747.
Mr Michael Every, head of financial markets research at Rabobank Group in Hong Kong, said that despite the recovery, the ringgit will likely resume its weakening trend now that markets have priced in Fed tightening, as the focus shifts back to the factors weighing on Malaysia's outlook - general US dollar strength, softness in commodities and potential declines in the Chinese currency.
A report in The Edge newspaper on Thursday cited Prime Minister Najib Razak as saying state-linked companies will repatriate RM627 million before year end as a means to boost the economy through domestic investment.
Malaysian consumer prices rose 2.5 per cent last month from a year earlier, the least in four months and matching the median forecast in a Bloomberg survey, according to a government report yesterday.
The central bank yesterday said that foreign exchange reserves, as of Nov 13, were US$93.9 billion (S$132.7 billion), slightly lower than the US$94 billion it reported on Oct 30. The reserves have dropped 19 per cent this year.