KUALA LUMPUR, Aug 28 — Malaysia’s ringgit climbed to a 10- month high on speculation the pace of economic growth and prospects of another interest-rate increase will spur inflows.

The currency was little changed at 3.1455 per dollar as of 10.14am in Kuala Lumpur, according to data compiled by Bloomberg. It rose as much as 0.2 per cent to 3.1415 earlier, the strongest level since October 29, and Malayan Banking Bhd predicts it could reach “fair value” of 3.10-3.12 in the coming weeks.

Gross domestic product in Southeast Asia’s third-biggest economy increased 6.4 per cent in the second quarter, the fastest rate in more than a year and more than analysts had forecast. Bank Negara Malaysia raised its policy rate in July for the first time in three years and 11 of 22 economists surveyed by Bloomberg see another hike at the September 18 review.

“The main event is the policy announcement and there could be expectations of better economic indicators,” said Saktiandi Supaat, the Singapore-based head of foreign-exchange research at Malayan Banking. “The dollar is still probably going to strengthen into the end of the year and this should limit a bit of Asian strength.”

Maybank is neutral-to-bullish on the ringgit and sees the currency weakening to 3.20 by year-end as an increase in US interest rates bolsters the greenback, Supaat said.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined 14 basis points, or 0.14 percentage point, to 5.57 per cent.

Bank Negara is seen boosting the policy rate next month to 3.5 per cent from 3.25 per cent, according to the survey. The final meeting of 2014 is scheduled for November 6.

The cost to insure the nation’s debt using five-year credit-default swaps fell one basis point to 76.5 in New York yesterday, the lowest closing level since May 2013, CMA data show. The yield on Malaysia’s 3.654 per cent sovereign bonds due October 2019 declined one basis point to 3.71 per cent, according to data compiled by Bloomberg. — Bloomberg