KUALA LUMPUR, Jan 21 — Malaysia’s ringgit led gains in Asia as a rally in stocks increased risk appetite, outweighing the impact of falling oil prices.
The currency climbed even as Brent crude sank overnight to the lowest level since 2003, putting further pressure on the finances of the region’s only major net oil exporter. Asian stocks rose on speculation this year’s selloff in global equities may have gone too far. Malaysia’s central bank will hold its policy rate later today, according to a Bloomberg survey.
“We have been seeing a lesser impact from oil on the ringgit,” said Choong Yin Pheng, senior manager for bonds and economic research at Hong Leong Bank Bhd. in Kuala Lumpur. “Most of the negative news has already been priced in. There’s also the belief that oil prices at this level are already very low and people are seeing there shouldn’t be much downside from here.”
The ringgit strengthened 0.5 per cent to 4.3733 a dollar as of 9.34am in Kuala Lumpur, paring its loss this year to 1.8 per cent, according to prices from local banks compiled by Bloomberg. It plunged 19 per cent in 2015 in the biggest drop since 1997 as a 35 per cent slump in Brent crude damped Malaysia’s economic outlook.
Rate meeting
Bank Negara Malaysia will keep its benchmark interest rate at 3.25 per cent for a ninth straight meeting, according to all 20 economists in the Bloomberg survey. The decision is due at 6pm local time. Malaysian monetary policy is already accommodative and the nation also needs other policies to support growth, Governor Zeti Akhtar Aziz said in Hong Kong on Monday.
The central bank is unlikely to lower interest rates this year as the balance of economic risks is tilted towards growth, Tim Condon, head of research at ING Groep NV in Singapore, wrote in a research note today.
Ten-year sovereign bonds rose, pushing the yield down five basis points to a five-month low of 4.02 per cent, according to prices from Bursa Malaysia. The yield on the notes due 2020 declined one basis point to 3.36 per cent. — Bloomberg
