The Malaysian ringgit pulled off 5-1/2-year lows against the dollar while other Asian currencies steadied on Thursday, as a pause in sliding global oil prices and better US jobs data put a floor under emerging markets and other riskier assets. The ringgit rallied 0.4 percent, moving further away from lows of 3.585 hit on Wednesday.
Under intense selling pressure over the past few weeks from concerns about the impact of tumbling oil prices on Malaysia's trade and fiscal balances, the currency won some respite after Wednesday's trade data for November showed surprisingly strong export growth and the biggest trade surplus since October 2011. Other Asian currencies such as the Indonesian rupiah, which has also seen heavy selling this week, barely moved as oil crept back above $51 a barrel, equity markets rallied and the US dollar clawed back ground against the yen and euro.
Yet analysts felt market participants would be wary of switching to a bullish stance on the Asian currencies, given the risk of a positive surprise on US growth numbers. "It may however be too soon to call a top in yields or in dollar-ringgit as global sentiment remains unreliable and energy prices unsupported," Citi strategist Gaurav Garg said in a note, referring to the ringgit.
"Moreover, negative spillovers for fiscal revenue from declining energy prices will still be relevant for Malaysia, and rating agencies and investors alike." Citi analysts also said they would hold on to their relative value trades, such as being long the Thai baht against the ringgit, into Friday's US labour market data. Meanwhile, China's yuan weakened after the central bank set the daily midpoint against the US dollar at its weakest level in more than a month.
The People's Bank of China set the midpoint rate at 6.1302 per dollar prior to market open, weaker than the previous fix of 6.1269 and at its weakest level since December 8. The spot yuan was changing hands at 6.2186 per dollar, more than one percent weaker than the midpoint. The spot rate is currently allowed to trade within a range of 2 percent above or below the official fixing on any given day.
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