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Ringgit rises with stocks, bonds as oil recovery helps finances
[SINGAPORE] Malaysia's ringgit rose to a five-week high, while bonds and stocks gained, as a recovery in Brent crude brightened prospects for the oil-exporting nation.
The bounce in oil is helping boost sentiment for the ringgit, which is Asia's worst-performing currency of 2015 due to tumbling commodities prices and a political scandal involving Prime Minister Najib Razak. The exchange rate also got a lift on Tuesday after China General Nuclear Power Corp agreed to purchase the power assets of state investment company 1Malaysia Development Bhd for US$2.3 billion. 1MDB is in the process of winding down amid criticism from lawmakers over its rising debt.
"Brent crude is up and that's going to help oil exporters and obviously Malaysia will gain from that," said Nizam Idris, head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd in Singapore. "Broad sentiment also improved quite a bit."
The ringgit climbed 1 per cent to 4.2080 a dollar as of 10.14am in Kuala Lumpur, taking its two-day gain to 2.3 per cent, prices from banks compiled by Bloomberg show. It earlier reached 4.2000, the highest since Oct 19. While Brent has rallied for five straight days, it is still down 20 per cent this year.
The 10-year government bond yield fell three basis points to 4.22 per cent, the lowest in almost three weeks, according to prices from Bursa Malaysia. The yield on debt due in 2020 dropped five basis points to 3.68 per cent, the least since August. The FTSE Bursa Malaysia KLCI Index of shares rose 0.4 per cent, gaining for a fifth day.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies excluding the yen, has dropped 4.4 per cent this year as demand for emerging-market assets waned amid a potential US interest-rate increase and slowing growth in China. The ringgit weakened 17 per cent as Brent prices more than halved from 2014's peak.
1MDB announced plans in February to dismantle its assets to appease lawmakers and also came under scrutiny after it almost defaulted on a loan.
Mr Najib, who heads the advisory board at the company, has found himself embroiled in a political scandal over a donation he received from the Middle East.