Ringgit climbs to 5-week high

THE ringgit rose to the strongest level in five weeks on speculation US efforts to remove toxic assets from banks will help unlock credit and spur demand for emerging-market assets. The currency advanced for a fourth day against the dollar after the US Treasury announced it will finance as much as US$1 trillion in purchases of banks’ distressed assets to revive the financial industry without having to nationalise lenders.

The MSCI Asia Pacific Index of regional stocks climbed for a second day to reach the highest since February 10. “There’s optimism in the stock and currency market arising from the US measures,” said Lim Shyang Fuh, head of treasury at ECM Libra Investment Bank Bhd in Kuala Lumpur. “Risk aversion has clearly subsided.”

The ringgit gained 0.4 per cent to 3.6252 per dollar as of 10:12 am in Kuala Lumpur, according to data compiled by Bloomberg. The currency climbed to 3.6225, the strongest since February 17.

Investors put US$350 million into emerging-market equity funds in the week ended March 18, a second week of inflows, as risk appetite improved, according to Cambridge, Massachusetts-based EPFR Global, a research company that tracks investor funds.

Seven of Asia’s 10 most-traded currencies rose against the greenback. Treasury Secretary Timothy Geithner yesterday said the US will use US$75 billion to US$100 billion of its bank-rescue funds to buy illiquid real-estate assets. The Public-Private Investment Program will also rely on Federal Reserve financing and Federal Deposit Insurance Corp debt guarantees. - Bloomberg