Ringgit makes biggest weekly gain in 2 months

Published: 2009/05/23

RINGGIT

MALAYSIA'S ringgit yesterday posted its biggest weekly gain in two months as concern US creditworthiness is weakening weighed on the greenback. Malaysia’s currency approached the strongest level this year after Bill Gross, the co-chief investment officer of Pacific Investment Management Co, yesterday said the US will “eventually” lose its AAA rating. The outlook on the UK’s top rating was yesterday cut to “negative” from “stable” by Standard & Poor’s as the government’s finances deteriorate.

Economists forecast Bank Negara Malaysia will keep its overnight rate at a record-low 2 per cent at a May 26 meeting.“The negative vibes on ratings in major economies are benefiting Asian currencies,” said Lam Chee Mun, who oversees about US$200 million at TA Investment Management Bhd in Kuala Lumpur.

“This increases the risk of a sell-off in the region because stocks and currencies may be running far ahead of their fundamentals. We have been selling.”The ringgit climbed 1.6 per cent to 3.4930 per dollar as of 4.45 pm in Kuala Lumpur, according to data compiled by Bloomberg.

The currency rose 1.1 per cent yesterday and reached 3.4901, its strongest level since January 7.The Dollar Index, used by the ICE to track the US currency versus the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, is down 3.3 per cent for the week and poised for its lowest close this year.

INTERBANK RATES

SHORT-term rates ended stable yesterday as Bank Negara Malaysia (BNM) intervened in the money market to absorb surplus funds, dealers said.As a result the overnight, one, two and three-week rates remained at 1.92 per cent, 1.94 per cent, 1.96 per cent and 1.98 per cent respectively.

Liquidity surplus in the conventional system dipped to RM15 billion from the RM23 billion estimated earlier. For Islamic funds, the total liquidity surplus was down to RM4.9 billion from an earlier estimate of RM5.9 billion.

Bank Negara this morning conducted five conventional and four Al-Wadiah tenders as well as a repo. It also conducted a late conventional tender for RM15 billion for three days and an Al-Wadiah tender for RM4.8 billion of three days.

KLIBOR

THE three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) futures on Bursa Malaysia Derivatives were lower in late trading yesterday.At close, June 2013 eased 10 ticks to 94.92. A total of 10 lots changed hands compared with 200 lots Thursday, while open interests remained at 40,780 contracts.

The underlying three-month KLIBOR stood at 2.12 per cent. Meanwhile, the five-year Malaysian Government Securities futures was untraded. - Agencies