Ringgit surges to hit 4.26 vs US dollar, after overnight gain in Brent crude

The ringgit made the highest climb in the three weeks, against the US dollar, this morning – Reuters file pic, September 17, 2015.Malaysia’s ringgit rose the most in three weeks and stocks climbed after an overnight surge in Brent crude eased concern that finances will deteriorate for Asia’s only major oil exporter. Odds for a US interest-rate increase today are also fading.

The currency advanced 1.1% to 4.2615 a dollar as of 9.10am. in Kuala Lumpur, according to prices from local banks compiled by Bloomberg.

While the gain trimmed September’s loss to 1.5%, it is still down 24% in the past 12 months, Asia’s worst performance.

Brent crude rose 6.7% yesterday, the biggest increase in more than two weeks. The FBM  KLCI rallied 2.2%.

Bank Negara Malaysia governor Tan Sri Zeti Akhtar Aziz said the country faces a “very challenging” period that it’s been able to manage so far and the ringgit’s decline has been driven by many factors including domestic ones, according to a report in the local New Straits Times newspaper.

The nation isn’t headed for a crisis, she said. The price of Brent has halved in the past 12 months, helping drive the ringgit to its lowest level in more than 17 years. A demonstration by government supporters on the Malaysia Day holiday yesterday passed relatively peacefully.

“The dollar is on the backfoot because analysts are coming around to the notion that the Federal Reserve may not hike tonight,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd.

“That’s provided relief for emerging-market currencies, plus the fact that oil prices have rallied.”

Investors will be looking to what decision the Fed makes on interest rates after months of speculation about imminent monetary tightening that could reduce the allure of emerging-market assets.

Futures show 32% odds of a move on Thursday, and a bigger 43% chance for an October increase. The likelihood for December is 63%.

The Bloomberg Dollar Spot Index was little changed, after falling 0.4% yesterday.

Prime Minister Datuk Seri Najib Razak has come under pressure to step down over a financial scandal.

Police fired tear gas at government supporters known as "red shirts" yesterday as a group tried to enter the capital’s Chinatown, in what some saw as being racially-motivated demonstrations. – Bloomberg