Malaysian ringgit leads Asian currencies' gains on Fitch upgrade, erases 1MDB concerns(Update)


  • Business
  • Wednesday, 01 Jul 2015

Fitch maintained Malaysia's long-term foreign currency issuer default rating (IDR) at A- and local currency at A, with the outlook revised to stable from negative previously. Fitch said in a statement that Malaysia's fiscal finances have improved and views progress on the Goods and Services Tax (GST) and fuel subsidy reform as supportive of the fiscal finances. (Forex trader holds ringgit and US$. - Filepic)

SINGAPORE: The Malaysian ringgit led gains among emerging Asian currencies on Wednesday as Fitch Ratings maintained the country's sovereign ratings, erasing concerns that it might cut them because of state fund 1MDB's debt problems.

The South Korean won bucked the regional trend of appreciation as exports fell for a sixth straight month in June.

Fitch maintained Malaysia's long-term foreign currency issuer default rating at A- and local currency at A, with the outlook revised to stable from negative previously.

The overnight move led investors to cut bearish bets on the ringgit in offshore non-deliverable forwards markets on Tuesday.

The spot ringgit rose as much as 1.2 percent to 3.7270 per dollar, its strongest since June 22, in the local market on Wednesday.

Other Malaysian assets also rose. Kuala Lumpur stocks  jumped 1.6 percent, while the 10-year bond yield slid to 3.984 percent, its lowest since June 4.

"Positioning in long USD/MYR is high, so it will take more than one day for people to get out of the trade and strengthen MYR," said Sean Yokota, head of Asia strategy for Scandinavian bank SEB in Singapore, referring to the dollar/ringgit pair.

The Malaysian currency had been the second-worst performing Asian currency so far this year, partially due to worries about a potential rating downgrade.

Still, the ringgit's rally is unlikely to last long on expectation that the U.S. Federal Reserve may raise interest rates later this year, analysts said.

Asian economies are also slowing with China's factory activity contracting for the fourth straight month in June. "We caution that USD/MYR may still see some upside pressure amid possible Fed tightening in September, while vulnerability to external development remains," said Christopher Wong, a senior currency analyst at Maybank in Singapore.

Reflecting such cautious views, the ringgit pared some of earlier gains. The spot has a chart resistance at 3.7270, the 23.6 percent Fibonacci retracement of its depreciation from April to June, analysts also said.

    CURRENCIES VS U.S. DOLLAR

    Change on the day at 0200 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen       122.49         122.50       +0.01
  Sing dlr        1.3460         1.3468       +0.06
  Taiwan dlr      30.861         31.070       +0.68
  Korean won     1119.60        1115.50       -0.37
 *Baht             33.77          33.77       +0.00
  Peso             45.06          45.09       +0.07
  Rupiah        13332.00       13330.00       -0.02
  Rupee            63.64          63.64       +0.00
  Ringgit         3.7440         3.7730       +0.77
  Yuan            6.2036         6.2010       -0.04

 
  Change so far in 2015
  Currency    Latest bid  End prev year    Pct Move
  Japan yen       122.49         119.66       -2.31
  Sing dlr        1.3460         1.3260       -1.49
  Taiwan dlr      30.861         31.718       +2.78
  Korean won     1119.60        1099.30       -1.81
  Baht             33.77          32.90       -2.56
  Peso             45.06          44.72       -0.75
  Rupiah        13332.00       12380.00       -7.14
  Rupee            63.64          63.03       -0.96
  Ringgit         3.7440         3.4965       -6.61
  Yuan            6.2036         6.2040       +0.01

  * Financial markets in Thailand are closed for a holiday.- Reuters

Earlier report

SINGAPORE: The Malaysian ringgit jumped on Wednesday as Fitch Ratings maintained the country's sovereign ratings, erasing concerns that it might cut them because of state fund 1MDB's debt problems.

The ringgit rose as much as 1.1 percent to 3.7330 per dollar, its strongest since June 23. The Malaysian currency stood at 3.7350 at 0017 GMT.

Fitch maintained Malaysia's long-term foreign currency issuer default rating at A- and local currency at A, with the outlook revised to stable from negative previously.

The Malaysian currency was the second-worst performing Asian currency so far this year, partially due to worries about a potential rating downgrade.- Reuters

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