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Ringgit leads gains in emerging currencies as crude oil rallies
[SEOUL] Malaysia's ringgit led gains in emerging-market currencies after Opec reached a preliminary agreement to reduce crude production, improving the outlook for the energy exporter.
The ringgit jumped the most in a week as trading started in Asia, while South Korea's won strengthened for a third day as the nation counts oil producers as the destination for much of its overseas sales.
The agreement by the Organization of Petroleum Exporting Countries bolstered developing-nation stocks as demand for higher-yielding assets increased. Brent crude surged 5.9 per cent Wednesday.
"The Malaysian ringgit is playing catch up given that all the other oil-related currencies from Norwegian Krone to Russian ruble have surged overnight on news that the Opec is converging on plans to cut oil production," said Vishnu Varathan, an economist at Mizuho Bank Ltd in Singapore.
"The knee-jerk jump in Brent of some 6 per cent is transmitting to oil related currencies."
The ringgit advanced 0.6 per cent to 4.1165 per US dollar as of 9:10am in Hong Kong, poised for its its biggest one-day gain since Sept 22. The won appreciated 0.3 per cent to 1,094.05 per US dollar after reaching 1,091.50, the strongest level since Sept 8.
Opec agreed Wednesday in Algiers to reduce production to a range of 32.5 million to 33 million barrels a day. Saudi Arabia and Iran had signalled before the meeting that an agreement was unlikely.
"Market sentiment has improved," Ha Keon Hyeong, an economist at Shinhan Investment Corp in Seoul, wrote in a research note. Further gains in the won beyond 1,090 per US dollar will be limited by concern the authorities may intervene to limit its advance, he wrote.
South Korean bonds were little changed, with the three-year note yield at 1.31 per cent and 10-year at 1.48 per cent.