Ringgit rises with won as Brent holds near US$45, BoE lowers rates

[KUALA LUMPUR] Malaysia's ringgit and the South Korean won rose for a second day as demand rose for higher-yielding assets after the Bank of England cut interest rates and oil rebounded.

A gauge of emerging-market shares rallied on Thursday after the BOE lowered borrowing costs for the first time in seven years, bolstering confidence policy makers will be able to contain the fallout from Britain's decision to leave the European Union.

Brent crude climbed 2.8 per cent last session and was above US$44 a barrel on Friday, set for its biggest weekly gain in a month, as gasoline stockpiles eased.

"A recovery in oil prices and a better tone to global equity markets, helped by the aggressive BOE easing, helped strengthen both the ringgit and Korean won on the open," said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd in Singapore.

"The ringgit remains sensitive to oil price movements, while the won is being driven by foreign equity flows, where investor sentiment is an important driver."

The ringgit strengthened 0.3 per cent to 4.04 per US dollar as of 9:06 am in Kuala Lumpur, taking its gain this week to 0.8 per cent, according to prices from local banks compiled by Bloomberg.

The won appreciated 0.2 per cent to 1,111.98 per US dollar in Seoul, on track for a second weekly advance.

The yield on South Korea's 10-year government bonds fell two basis points to 1.40 per cent, exchange prices showed. The five-year yield declined one basis point to 1.25 per cent.

A report due at noon local time will show Malaysian exports fell 3.7 per cent in June from a year earlier, the biggest drop since May 2015, according to the median forecast of economists in a Bloomberg survey.

The trade surplus probably widened to 6 billion ringgit (S$1.98 billion) from 3.26 billion ringgit, a separate survey showed.

BLOOMBERG