Ringgit leads Asia FX gains

Malaysia's ringgit hit a more than three-week high on Wednesday, tracking rallies in oil prices and commodity currencies, while emerging Asian currencies rose on growing risk appetite. The ringgit jumped as much as 2.3 percent to 3.5460 per dollar, its strongest since January 12, as investors scrambled for the unit to cover short positions in the second-worst performing emerging Asian currency so far this year.
Malaysian stocks rose 1.3 percent, well outperforming regional peers. Government bond prices gained with the 10-year yield down to 3.796 percent, its lowest since November 12. Oil prices advanced about 20 percent over the last four sessions, easing concerns that lower crude prices may hurt Malaysia's current account surplus and widen its fiscal deficit, given its status as a net oil exporter.
The Malaysian currency rose on demand related to the daily fixing, while investors bought the unit against the neighbouring Singapore dollar. The ringgit found further support from catch-up plays after the local financial markets were closed on Monday and Tuesday when oil prices rose. "If oil continues to rebound, it's plausible that the MYR could retrace further, given the hitherto overloaded positioning," said Emmanuel Ng, a foreign exchange strategist with OCBC Bank in Singapore.
Still, he doubted if the ringgit's rebound could sustain, saying: "This crude move in the last few days may simply be position adjustments. Nothing has changed fundamentally." Oil prices retreated in Asia on Wednesday. Other emerging Asian currencies rose as risk sentiment improved further. Greek Prime Minister Alexis Tsipras sought to reassure international partners that Athens did not want to create divisions in Europe with its call for a new debt accord and said he was open to listening to alternative proposals.
South Korea's won rose as demand from exporters for settlements caused stop-loss dollar selling. Daewoo Shipbuilding & Marine Engineering Co Ltd said it had won a $200 million ship order, increasing expectations of more demand for the local currency. Caution increased over possible intervention by the foreign exchange authorities to stem the won's strength, especially amid falls in the yen. The Indonesian rupiah gained as continuous bond inflows lifted debt prices.
Government bond yields slid with the 10-year yield down to as low as 6.877 percent, its lowest since June 2013. The Indonesian currency pared some of its earlier gains as the central bank was suspected of intervening to limit its appreciation, traders said. Traders were also cautious ahead of fourth-quarter growth data on Thursday.
Indonesia's economy likely grew 4.95 percent in the last three months of 2014 from a year earlier, slowing from 5.01 percent in the third quarter, a Reuters poll showed. "Given tomorrow's GDP data, I prefer to wait and see for now," said a Jakarta-based trader, adding that such caution kept the rupiah weaker than 12,600 per dollar. The trader said he cut long rupiah positions, which he had built up around 12,660.