Malaysian Ringgit Heads for Weekly Advance on Recovery Outlook

By David Yong

April 24 (Bloomberg) -- Malaysia’s ringgit was set for a weekly advance on optimism signs of economic recovery in the region will spur investors to increase their purchases of emerging-market assets.

The ringgit strengthened for a second day after a Bank of Korea report today showed Asia’s fourth-largest economy unexpectedly grew in the first quarter. Standard Chartered Bank Plc yesterday upgraded its short-term rating and forecasts on the ringgit, saying the country’s economic slump will ease.

“The economic data is making investors more optimistic about buying riskier assets, which means inflows into the stock markets,” said Tan Voon Ching, a currency trader at OSK Investment Bank Bhd. in Kuala Lumpur. “That should support regional currencies today.”

The ringgit rose 0.5 percent to 3.6035 per dollar as of 9:29 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency has climbed 0.4 percent for the week, extending this month’s gains to 1.2 percent.

Emerging-market equity funds took in a net $1.08 billion in the week ended April 22, taking inflows this year to more than $7 billion, according to Cambridge, Massachusetts-based EPFR Global, a research company that tracks $11 trillion of funds worldwide.

South Korea’s gross domestic product unexpectedly expanded 0.1 percent in the first quarter as the government stepped up spending to revive the economy. Economists in a Bloomberg News survey had expected a 0.2 percent contraction.

Malaysia’s economy “reached its worst point in the first quarter,” according to Thomas Harr and Alvin Liew, Singapore- based analysts at Standard Chartered. The ringgit’s value on a trade-weighted basis will likely remain stable in the next six months “as most of the negatives are already in the price.”

The bank raised its ringgit rating to “neutral” from “underweight,” and upgraded its end-September and year-end forecasts for the local currency to 3.60 and 3.50 per dollar, respectively. The previous forecasts were 3.65 and 3.55, they said in the report.

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