KUALA LUMPUR, June 18 — Malaysia’s ringgit rose by the most in six weeks after the Federal Reserve signaled it will raise interest rates gradually once it tightens policy this year, alleviating pressure on the currency that’s been hit by falling oil prices.
Asian currencies have declined over the past month amid prospects of higher US rates, with the ringgit leading losses as Brent Crude prices that are half what they were at their 2014 peak weigh on earnings for the oil exporter.
While a weaker currency may boost the nation’s competitiveness in overseas markets, it threatens to push up inflation, with a report tomorrow forecast to show an acceleration in May.
“Asian currencies, including the ringgit, are reacting to the Fed comments,” said Wong Chee Seng, a foreign-exchange strategist at AmBank Group in Kuala Lumpur.
“The Malaysian unit is strengthening more because of technical adjustments.”
The ringgit gained by the most since May 6, rising 1 percent to 3.7220 per dollar as of 12:24pm in Kuala Lumpur, data compiled by Bloomberg show.
It earlier climbed to 3.7210, the highest level in more than a week and trimming the past month’s loss to 4.1 percent.
Malaysia’s consumer prices increased 2.1 percent in May from a year earlier, the fastest pace in four months and more than April’s 1.8 percent pace, according to the median estimate in a Bloomberg survey.
Ten-year government bonds rose for a fifth day, with the yield falling three basis points to 4.04 percent.
That’s the lowest level since June 4.
Fed Chair Janet Yellen said late in the US yesterday that a pickup in the economy is keeping it on track to boost interest rates this year, though the pace of tightening is likely to be more gradual than previously anticipated. — Bloomberg
