Malaysia's Ringgit Rises on Speculation 4-Week Slump Too Steep

By David Yong

Aug. 18 (Bloomberg) -- Malaysia's ringgit rose, halting a two-day decline, as a technical chart used by traders indicated the currency's slump in the past four weeks was excessive.

The ringgit also gained from near this year's low as the dollar weakened against the yen and euro. U.S. government housing and inflation reports this week may add to speculation the Federal Reserve will delay increasing interest rates.

``The ringgit has been sold down too aggressively,'' said Wan Murezani Mohamad, an analyst at Malaysian Rating Corp. in Kuala Lumpur. ``The U.S. credit and housing markets are still in the doldrums so there's no room for the Fed to be hawkish in the coming months.''

The ringgit climbed 0.2 percent to 3.3410 per dollar as of 9:10 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency fell 1.4 percent last week, the most since the five-day period ended Nov. 16.

The dollar-ringgit's 14-day relative strength index, a comparison of the magnitude of gains and losses, reached more than 70 in the past seven trading days, according to data compiled by Bloomberg. A level below 30 or above 70 signals a reversal may occur.

Traders raised bets from a week ago that the Fed will hold its target rate for overnight loans between banks at 2 percent in the remaining three meetings this year, according to interest-rate futures contracts.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.