Malaysia’s ringgit strengthened the most in two weeks and bonds rose after a decline in U.S. home sales eased concern the Federal Reserve will rein in monetary stimulus that’s spurred inflows to emerging markets.
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, fell for a third day after official data showed sales of previously owned U.S. homes unexpectedly dropped 1.2 percent in June. Malaysia’s central bank Governor Zeti Akhtar Aziz said yesterday that while investment flows will precipitate greater currency volatility, the nation will monitor and cooperate with other Asian countries to maintain stability.
The ringgit led gains in Asia today, advancing 0.5 percent to 3.1646 per dollar as of 9:58 a.m. in Kuala Lumpur, the biggest increase since July 9, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined 43 basis points, or 0.43 percentage point, to 7.13 percent.