Ringgit rally best since 2013 as trade data adds to oil optimism

[KUALA LUMPUR] Malaysia's ringgit headed for its biggest three-day rally in two years as trade data beat estimates and Brent crude extended its advance above US$50 a barrel, helping shore up revenue for Asia's only major oil exporter.

The commodity rose 5.4 per cent overnight and was adding to those gains on Wednesday, with the ringgit finding support from losses in the dollar as bets for a 2015 US interest-rate increase fade. Malaysia's trade surplus widened to the highest in almost a year in August, the government reported Wednesday.

"The ringgit is benefiting from a rebound in oil prices," said Khoon Goh, a senior strategist at Australia & New Zealand Banking Group Ltd in Singapore. "The better-than expected export and trade surplus resulted in further gains." The ringgit appreciated 1.9 per cent to 4.2950 a dollar as of 1 pm in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It's climbed 2.7 per cent in the days, the most since September 2013, and earlier reached a two-week high of 4.2900. A gauge of the dollar tracking the US currency against 10 major counterparts fell the most in six weeks in New York.

Brent crude has still more than halved from last year's high, helping make the ringgit the fourth-worst performer among 24 emerging-market currencies tracked by Bloomberg this year with an 18 per cent loss.

Trade Numbers Exports rose 4.1 per cent from a year earlier and imports unexpectedly contracted 6.1 per cent, compared with forecast gains in a Bloomberg survey of 1.3 percent and 1.7 percent, respectively. The trade surplus widened to 10.2 billion ringgit (S$3.4 billion), the biggest gap since November 2014 and beating the 4.1 billion ringgit predicted.

Bets for an October US rate increase are now only 8 per cent and 36 per cent for December, the last two meetings of 2015, futures show. March is starting to look the most likely for the first move, with odds of 57 per cent compared with January's 43 per cent.

"Crude oil prices were higher overnight and that spilled over into commodity currencies," said Sim Moh Siong, a foreign- exchange strategist at Bank of Singapore Ltd. "The market continues to expect the Federal Reserve to delay the lift-off, and that's benefiting emerging-market currencies." Sovereign bonds fell, with the 10-year yield rising two basis points to 4.18 per cent and the five-year yield climbing five basis points to 3.80 percent, according to prices from Bursa Malaysia. The FTSE Bursa Malaysia KLCI Index of stocks was up 0.4 per cent at the midday break.

BLOOMBERG