Ringgit gains most since 2013 as Fed bets pared on factory data

[KUALA LUMPUR] Malaysia's ringgit gained the most since September 2013 after disappointing US data prompted traders to pare rate-increase bets.

The ringgit rose as much as 1.5 per cent versus the greenback, leading gains in Asia. It closed up 1.4 per cent at 3.6537 in Kuala Lumpur, according to data compiled by Bloomberg. A dollar gauge fell 0.4 per cent earlier in a third day off losses before climbing 0.1 per cent.

Investors cut wagers on when they see the Federal Reserve tightening monetary policy, including futures dated from September through January, as the Empire Manufacturing Index unexpectedly contracted in April. Brent crude prices advanced for a sixth day, which may help allay concern that government finances will deteriorate in a nation that's a net oil exporter.

"Now, maybe the consensus for the Fed rate hike is more toward September," said Sean Yokota, the Singapore-based head of Asian strategy at Skandinaviska Enskilda Banken AB. "It's a bit of a dollar squeeze."

Malaysia sold US$1.5 billion of 10- and 30-year dollar Islamic bonds Wednesday in its first global sale since 2011 and got orders for more than US$9 billion, according to an e-mailed statement from the Ministry of Finance. The debt was issued at yield spreads over US Treasuries that were less than the initial price target.

The Southeast Asian nation could be vulnerable to capital outflows should the US raise rates due to the level of foreign ownership of its debt. Global funds held 30 per cent of the securities in March compared with 18 per cent for Thailand, central bank data show.

Malaysia's local-currency sovereign bonds advanced, with the 10-year note yield declining one basis point, or 0.01 percentage point, to 3.89 per cent, data compiled by Bloomberg show. The government sold its 10-year sukuk Wednesday at 3.04 per cent and the 30-year notes at 4.24 per cent.

BLOOMBERG