SINGAPORE: The Malaysian ringgit was set to enjoy its biggest daily gain in nearly three months on Monday as interbank speculators covered short positions in thin trading on a Cyprus deal with international lenders for a bailout.
Some local exporters bought the ringgit, traders said, helping it rise 0.6 percent to 3.0950 against the dollar as of 0250 GMT.
If the local currency maintains the gain, it would be the largest daily percentage appreciation since Jan. 2 when it rose 0.8 percent, according to Thomson Reuters data.
Still, investors hesitated to push the ringgit firmer than a resistance level around 3.0900, with a current 200-day moving average at 3.0888, given caution ahead of a national election that must be called before the end of April.
The Malaysian currency has been closing daily sessions weaker than the average since March 2. The ringgit has lost 1.2 percent against the dollar so far this year, Thomson Reuters data showed.
Maybank said in a note that the momentum was now with the ringgit and 3.0900 was in sight, but its gains were likely to be capped by uncertainties over the upcoming election.
Malaysia's financial markets were caught napping in 2008 when shock gains by the opposition redrew the country's political map and sparked a 10 percent one-day plunge in the main index.
There is scope for another surprise election result due to a lack of reliable opinion polls. The three-party opposition led by former deputy prime minister Anwar Ibrahim is expected to mount a well-organised campaign, raising chances that it will take seats away from the ruling Barisan Nasional coalition that has led Malaysia for decades.
Some traders and analysts have said the uncertainties have been priced into the ringgit, and kept most traders from building more bullish positions. But one senior Malaysian bank trader in Kuala Lumpur said the ringgit may head to 3.0800 at most and he would build up long dollar positions there.
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