KUALA LUMPUR, Feb 4 — Malaysia’s ringgit gained the most in Asia as a rally in Brent crude brightened the outlook for the oil exporter, which cut its budget assumption for the commodity last week following an 18-month decline.
While Brent climbed 7 per cent overnight, it’s been volatile this year and is down 6 per cent from the end of December.
As prices showed signs of stabilization above US$30 (RM124.86) a barrel, the ringgit is among the best performers in emerging markets on speculation its worst annual loss in almost two decades was overdone. The currency was also supported today by a slide in the dollar as services data raised concern about the strength of the US economy.
The ringgit strengthened 1.5 per cent to 4.1588 a dollar as of 9:06 a.m. in Kuala Lumpur, the biggest advance since January 22, according to prices from local banks compiled by Bloomberg. It has appreciated 3.2 per cent this year, trailing only the Hungarian forint among 24 developing-nation exchange rates.
“The ringgit benefited from the rise in oil prices and general dollar weakness,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Further gains will be limited to 4.15, which is a key level.”
The currency rallied 3.5 per cent last week, its biggest advance since October, as Brent climbed almost 8 per cent.
The ringgit rose to a three-month high of 4.1195 on January 29 before surrendering those gains on the next day of trading on February 2.
Growth in US services slowed in January to the weakest in almost two years. New York Federal Reserve President William Dudley said in an interview with Market News International that financial conditions are “considerably tighter” than in December, and if they remained in place by March, “we would have to take that into consideration in terms of that monetary-policy decision.”
Fed Governor Lael Brainard said in comments to the Wall Street Journal that “recent developments reinforce the case for watchful waiting.” — Bloomberg
