KUALA LUMPUR, June 6 — Malaysian exports surged by nearly a fifth in April, beating expectations and pushing the ringgit higher as traders bet that the rapid growth in trade would make the central bank more likely to raise interest rates next month.

Exports in April rose 18.9 per cent from a year earlier, nearly twice as much as expected, pushing the trade surplus to RM8.9 billion (US$2.8 billion), wider than the forecast in a Reuters poll.

Imports rose 5.0 per cent from a year ago, also beating expectations, helped by a 7.5 per cent gain in imports of electronic products.

The Reuters poll had forecast a 9.7 per cent rise in exports and a 0.7 per cent drop in imports, with a trade surplus of RM6.9 billion.

The robust start to the second quarter trade performance adds to expectations that Malaysia’s central bank will raise interest rates for the first time in three years when it holds its next meeting on July 10.

“Overall, the growth in exports provides an incentive for a rate hike,” said Wellian Wiranto, an economist at OCBC in Singapore.

“We are looking at 25 basis points in July and 25 basis points in September. Hiking by 50 basis points is more than enough for the central bank.”

Malaysian exports surged by nearly a fifth in April, beating expectations and pushing the ringgit higher. — Reuters pic

A strong trade performance, led by improved shipments of the country’s key commodity and electronics products, helped drive unexpectedly strong economic growth of 6.2 per cent in the first three months of 2014 from a year earlier.

The central bank has dropped strong hints of a possible tightening at its next policy meeting after keeping its benchmark rate at 3.0 per cent since May 2011.

At its last meeting in May it said that monetary policy may need to be adjusted to ward off growing imbalances in the economy linked to faster growth, such as rising household debt and excessive risk-taking. Most economists expect a small hike of 0.25 percentage points.

April exports to China increased 13.1 per cent from a year earlier due to higher exports of electronic and electrical products, petroleum and liquefied natural gas.

The Malaysian ringgit extended its gains following the trade data to hit a session high of 3.216 against the dollar. It has appreciated by around 2 per cent so far this year.

For a graphic on Malaysia’s exports and imports, please click here. — Reuters