[KUALA LUMPUR] Malaysian stocks climbed for a fifth day and the ringgit rallied after weekend protests calling for the resignation of Prime Minister Najib Razak ended peacefully and markets reopened following the National Day holiday. An overnight surge in oil prices also aided local markets.
The FTSE Bursa Malaysia KLCI Index rose 0.6 per cent to 1,622.73 as of 1:53 pm in Kuala Lumpur, after earlier gaining as much as 2.9 per cent.
TheÂ ringgit appreciated 0.9 per cent to 4.1560 per US dollar, extending its recovery from a 17-year low of 4.2990 reached on Aug. 26.
It was trading at 2.9570 per Singapore dollar as of 2:25 pm, the below the key pscychological 3-to-1 level it crossed last month.
Brent crude prices climbed 8.2 per cent in New York on Monday, easing concern that government finances will deteriorate for Asia's only major net oil exporter and helping spur the longest winning streak in Malaysia's key share index in seven weeks.
The political rallies in the capital failed to draw a large number of ethnic Malays, a sign that a funding scandal enveloping Najib has yet to cause major dissent within his grassroots power base.
"Stronger oil prices are certainly helping at the margin," said Sue Trinh, head of Asia foreign-exchange strategy at Royal Bank of Canada in Hong Kong. "For the ringgit, we've got a lot of domestic forces at play as well, not least being the political uncertainty. Things are likely to get worse before they get better and we wouldn't rule out another re-test of the 4.3 level."
The Malaysian equity index fell 15 per cent from its July 2014 high through Friday and the currency is Asia's worst performer this year as political uncertainty clouded the outlook amid an emerging-market selloff. Prospects that the US will soon raise interest rates are also weighing on the ringgit. The nation's sovereign bonds advanced, with the 10-year yield dropping 14 basis points to 4.26 per cent, the biggest decline since September 2013, according to Bursa Malaysia prices. The five-year yield retreated 13 basis points to 3.84 per cent.