Ringgit rises from a 2-week low

CPO FUTURES

MALAYSIA'S ringgit rose yesterday from a two-week low on speculation a recovery in the nation’s biggest export markets will underpin demand for the currency.The currency strengthened for the first time in five days before a report next week that’s forecast to show the economy of Singapore, Malaysia’s No. 1 trade partner, expanded in the second quarter for the first time in more than a year.A global economic recovery should help lift both the ringgit and the Singapore dollar, according to UOB Asset Management Ltd.

Singapore “is turning around quite rapidly,” said Chia Tse Chern, assistant director for fixed income at UOB Asset in Singapore.“The Singapore dollar and the ringgit are like sister currencies and a significant proportion of their trade is with each other. If the Singapore dollar appreciates, it should drag the ringgit a little bit stronger.”

The ringgit rose 0.2 per cent to 3.5400 per dollar as of 10.12 am in Kuala Lumpur, according to data compiled by Bloomberg. It earlier reached 3.5495, the lowest since June 23. Singapore’s dollar climbed 0.2 per cent to S$1.4565.

Singapore’s economy grew 13.4 per cent in the second quarter, after a 14.6 per cent contraction in the previous three months, according to the median forecast in a Bloomberg News survey of economists.

The government is due to release its initial estimate of gross domestic product for the period as early as this week. Malaysia shipped 14 per cent of its exports in the first five months of 2009 to Singapore.

The US Institute for Supply Management on Monday said its index of non-manufacturing businesses, which make up almost 90 per cent of the world’s biggest economy, rose to 47 in June, climbing for a third straight month. Readings of less than 50 signal contraction.

INTERBANK RATES

SHORT-term rates remained steady at close yesterday as Bank Negara Malaysia continued to siphon off excess liquidity to keep rates in check. Following Bank Negara's move, the liquidity surplus was reduced to RM27.9 billion in conventional operations and RM7.1 billion in Islamic funds.

The central bank had earlier estimated the day's surplus at RM35.6 billion for conventional operations and RM11.2 billion in Islamic funds. Bank Negara issued conventional tenders of RM2 billion each for one week and 13 days respectively and RM3 billion for three weeks.

The central bank also conducted a repo tender of RM1 billion for 43-day money. It also offered Al-Wadiah tenders of RM1 billion for one week, RM500 million each for two weeks and three weeks respectively, and RM2 billion for 28 days.

It also conducted a late conventional tender for RM27.8 billion of one-day money and an Al-Wadiah tender for RM7 billion of one-day money. The overnight rate was at 1.91 per cent while the one-week, two-week and three-week rates were at 1.94 per cent, 1.96 per cent and 1.98 per cent respectively.

KLIBOR

THE three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) futures contracts on Bursa Malaysia Derivatives closed untraded yesterday, dealers said. The underlying three-month KLIBOR was unchanged at 2.13 per cent. The five-year Malaysian Government Securities futures contracts were also untraded. - Agencies