By BLOOMBERG
A measure of expected swings in the ringgit fell to an 11-month low on speculation Malaysia’s widening current-account surplus will buoy the currency as the US pares stimulus.
The excess in the broadest measure of trade probably increased to RM17.5 billion in the fourth quarter, which would be the biggest surplus in a year, according to the median estimate of economists in a Bloomberg survey before data due today. Federal Reserve chairman Janet Yellen pledged to keep scaling back stimulus in measured steps, in her first report to Congress yesterday.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 35 basis points to 6.52%, as of 9:34am in Kuala Lumpur, according to data compiled by Bloomberg. That’s the lowest level since March 14, 2013. The gauge has fallen 138 basis points, or 1.38 percentage points, in seven days.
“Tonight’s current-account data should show a fairly decent improvement,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp in Singapore. “As you’ve seen sentiment around equity markets and broader emerging-market sentiment calm down, the natural volatility is starting to subside.”
Malaysia’s benchmark stock index has rallied 1.1% this month following a 3.4% drop in January as concern that China’s growth is slowing spurred outflows.
GDP report
The ringgit strengthened 0.2% to 3.3252 per dollar, trimming its three-month loss to 3.5%, data compiled by Bloomberg show. The yield on the 3.26% government bonds due March 2018 was steady at 3.7%.
Gross domestic product increased 4.8%in the fourth quarter from a year earlier, after an increase of 5% in the previous three months, a separate Bloomberg survey showed before a report due today.
Barclays Plc sees a “high” probability of a Malaysian interest-rate increase this year, analysts including Singapore- based Rahul Bajoria wrote in a research note today. Bank Negara Malaysia has kept the policy rate at 3% since May 2011.
— by Liau Y-Sing
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