KUALA LUMPUR, Oct 1 — Malaysia’s ringgit rallied, leading gains in Asia, as the dollar weakened on a partial US government shutdown. Sovereign bonds advanced.
The US administration began a partial closure at midnight in Washington for the first time in 17 years after Congress failed to break a partisan deadlock. No further negotiations were immediately planned, raising concerns about a battle to raise the nation’s debt limit to avoid a first-ever default after October 17. The Bloomberg US Dollar Index fell 0.2 per cent.
“The dollar weakened a bit on the back of the situation out of the US,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd in Singapore. “The debt ceiling is the bigger issue for emerging-market currencies.”
The ringgit strengthened 0.8 per cent to 3.2347 per dollar as of 12:54pm in Kuala Lumpur, the best performance among Asia’s 11 most-traded currencies, according to data compiled by Bloomberg. That was the biggest gain since September 19.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 14 basis points to 10.82 per cent.
Foreign ownership of the Southeast Asian nation’s debt dropped 1.6 per cent to RM212 billion (US$66 billion) in August, the third straight month of declines, Bank Negara Malaysia data showed. Global funds held 28 per cent of Malaysian government bonds in August, compared with 31 per cent for Indonesian notes and 17 per cent for Thai securities, according to finance ministry and central bank figures.
Outflows from emerging markets are likely to be temporary as there’s still plenty of liquidity in the system, Mark Mobius, executive chairman of Templeton Emerging Markets Group in San Mateo, California, wrote on his blog today.
The yield on the 3.26 per cent Malaysian sovereign notes due March 2018 dropped two basis points, or 0.02 percentage point, to 3.58 per cent, according to data compiled by Bloomberg. — Bloomberg
