Asian forex: Ringgit, rupiah climb as global growth concerns ebb

The Malaysian ringgit hit a 7-1/2 month high and the Indonesian rupiah scaled a 10-month peak on Monday, as solid US jobs data eased worries about a slowdown in global economic growth and supported risk assets. Many Asian currencies added to their recent gains, after data on Friday showed US employment gains surged in February, increasing signs that the US economy has regained momentum following its fourth quarter slowing.
"The risk-off factors seen since the start of the year, such as falls in oil prices, concerns about the Chinese and US economies are all starting to calm down somewhat," said Shinji Kureda, head of FX trading group for Sumitomo Mitsui Banking Corporation in Tokyo.
Emerging market currencies are likely to continue to benefit from this improvement in risk sentiment for a while, he said. While there are differing views on the economic policy stance unveiled by China at the National People's Congress (NPC) that opened over the weekend, Kureda said it seemed to be adding to the firm tone of Asian currencies. He said that instead of promoting reforms at the expense of growth, Chinese policymakers made it clear "they will still take economic stimulus-type policies".
The bid rate on the rupiah rose to as high as 12,950 versus the dollar, its strongest level since late April 2015. The Malaysian ringgit touched a peak of 4.0730, its highest level since mid-August. Asian currencies have rallied over the past week amid signs of inflows into emerging market (EM) bonds and equities, underpinned by expectations that the US Federal Reserve will be in no rush to raise interest rates.
"The market is looking at barely one (Fed) rate hike by the end of the year," said Eugene Leow, interest rate strategist for DBS Bank. "Coupled with the bounce in commodity prices, there is scope for spread narrowing between (yields on) EM bonds and US Treasury yields of similar tenor," he said. "It's been a good month for the ringgit on the back of firming oil prices," said Stephen Innes, a senior trader for FX broker OANDA in Singapore.
Rises in global oil prices have eased concerns about Malaysia's falling oil and gas revenue. The ringgit has risen about 2.8 percent against the dollar in March. It has gained about 4.9 percent in January-March, putting it on track for its best quarterly performance since the July-September quarter of 2010.