Ringgit rallies to near 1997's high

Malaysia’s ringgit approached its strongest level since 1997, before a report this week that may show inflation accelerated the most in 22 months in February, adding to speculation that the central bank will allow further appreciation to cap price increases.

The currency rallied for a fifth day, its longest winning streak in a month, as military conflict in Libya and political turmoil in the Middle East kept crude oil prices above $100 a barrel. Bonds declined before a government report on March 25 that may show consumer prices in Southeast Asia’s third-largest economy climbed to 2.7 per cent last month from a year ago, from 2.4 per cent in January, according to the median estimate of 17 economists in a Bloomberg news survey.

“The pressure on inflation has been building, which may require a policy response soon,” said Choong Yin Pheng, manager for economic and fixed-income research at Hong Leong Bank Bhd in Kuala Lumpur. “The ringgit can benefit. It will be a gradual process.”

The currency advanced 0.2 per cent to 3.0290 per dollar as of 4:05 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The ringgit has rallied 1.2 per cent since March 15 to near its 13-year high of 3.0240 set on Feb. 21.

Asian currencies climbed for a fourth day as stocks rallied as concern about Japan nuclear-plant disaster ebbed after Prime Minister Naoto Kan said yesterday there’s “light at the end of the tunnel.”

Bank Negara Malaysia will release its 2010 annual report tomorrow, which will detail the economy’s performance and may include forecasts for this year. Policy makers said on March 11 that domestic prices are expected to continue to rise, “driven by significant increases in global commodity and energy prices.” -- Bloomberg