KUALA LUMPUR, Aug 29 ― Malaysia’s ringgit was set for the longest run of monthly gains since November 2012 after a pickup in economic growth spurred bets the central bank will increase interest rates for a second time this year.

South Korea’s won and the ringgit are the best performers in August among 24 emerging-market currencies tracked by Bloomberg. Reports this month showed Malaysia’s second-quarter economic growth and current-account surplus beat economists’ estimates. Bank Negara Malaysia, which increased borrowing costs in July for the first time in more than three years, may do so again in September, according to Oversea-Chinese Banking Corp.

“After the good data, the market is starting to price in an earlier rate hike,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “That provided support for the ringgit.”

The currency strengthened 1.2 per cent in August, on course for a fourth month of gains, to 3.1565 per dollar as of 10.42am in Kuala Lumpur, according to data compiled by Bloomberg. The ringgit fell 0.2 per cent today, paring its weekly advance to 0.1 per cent.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 35 basis points, or 0.35 per centage point, since July 31 to 5.59 per cent.

Growth, surplus

Malaysia’s US$312 billion (RM984 million) economy grew 6.4 per cent in the second quarter from a year earlier, the fastest pace since the final three months of 2012, according to official figures released August 15. A separate report showed the nation recorded a current-account surplus of RM16 billion, higher than the median estimate of economists for an excess of RM11.4 billion.

Bank Negara, which increased the overnight policy rate by 25 basis points to 3.25 per cent on July 10, will probably raise it to 3.50 per cent as growth is likely to remain healthy, Wellian Wiranto, a Singapore-based economist at OCBC, wrote in a report yesterday.

The yield on Malaysia’s 4.181 per cent sovereign bonds due July 2024 climbed four basis points in August, headed for the first monthly advance this year, to 3.93 per cent, data compiled by Bloomberg show. It fell three basis points this week and was little changed today. ― Bloomberg