Sep 12, 2014

    Malaysian ringgit rises on talk of interest-rate hike


    MALAYSIA'S ringgit rose the most in Asia on speculation that the central bank will raise interest rates - for the second time this year - during a review next week.

    Bank Negara Malaysia will meet on Thursday, after governor Zeti Akhtar Aziz said last week that the monetary authority will assess the risks to inflation and economic growth while setting policy. The ringgit fell 0.9 per cent in the past two days, the most in almost eight months.

    "The Bank Negara decision coming up next week, where we expect them to hike rates, is likely to provide some near-term support for the ringgit," said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group in Singapore.

    "We're seeing some positioning pullback as we've seen the ringgit weaken."

    The ringgit advanced 0.3 per cent, the biggest gain since Aug 27, to 3.1937 per US dollar as of 5.24pm in Kuala Lumpur, according to data compiled by Bloomberg.

    One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell five basis points, or 0.05 percentage point, to 6.77 per cent.

    Malaysia was the first country in South-east Asia to raise its benchmark rate this year, with a 25-basis point increase to 3.25 per cent on July 10.

    Consumer prices advanced 3.2 per cent in July from a year earlier, near the 3.5 per cent rate recorded in March and February, which was the fastest in almost three years.