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Malaysian ringgit rebounds from 10-year low after Zeti reassures
[KUALA LUMPUR] The ringgit rebounded from a 10-year low after Bank Negara Malaysia Governor Zeti Akhtar Aziz said its weakness isn't sustainable.
The currency snapped a five-day decline after Zeti said the exchange rate reflected market sentiment and not underlying economic fundamentals and that the nation has "moved on" from emergency measures. Asian stocks rose, halting a four-day drop that was fueled by concern Greece will leave the euro.
The ringgit strengthened 0.2 per cent to 3.7780 a dollar as of 10am in Kuala Lumpur, data compiled by Bloomberg show. It fell 1.4 per cent over the previous five days and reached 3.7887 on Monday, the weakest since July 2005.
"Zeti's statement is reassuring but not new," said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. "The currency is probably also benefiting from the contained financial contagion from the developments in Greece."
The prospect of a rating downgrade for Malaysia has been weighing on the ringgit, which has fallen 2.9 per cent this month in Asia's worst performance. Fitch Ratings warned in March that the ranking was "more than 50 per cent likely" to be cut.
It said it will complete its assessment before the end of June, although it's not clear when it will be released.
Exports fell 9.1 per cent in May from a year earlier, following an 8.8 per cent decline in April, according to a Bloomberg survey before data due July 3.
Government bonds dropped. The yield on the three-year notes rose two basis points to 3.23 per cent, while the 10-year yield increased one basis point to 4.09 per cent, according to data compiled by Bloomberg.