The ringgit led gains in Asia before Prime Minister Datuk Seri Najib Razakâ€™s budget speech as the prospect of more monetary stimulus from the European Central Bank buoyed emerging-market assets.
Najib will unveil the governmentâ€™s 2016 spending plans for Southeast Asiaâ€™s third-largest economy today.
International Trade and Indusrey Minister Datuk Seri Mustapa Mohamed said in Parliament on Tuesday that the budget would reveal measures to strengthen the ringgit, Asiaâ€™s worst performer this year.
The MSCI Asia Pacific Index of stocks climbed with regional currencies today as ECB president Mario Draghi suggested the euro area may need a fresh injection of stimulus by year-end to counter an economic slowdown.
â€œThe ringgit is up on speculation the budget will be friendly, focusing on infrastructure and boosting consumer spending,â€ said Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur. â€œThe ECBâ€™s stimulus measures should drive flows to Asia.â€
The ringgit strengthened 1.3% to 4.23 a dollar as of 12.10pm in Kuala Lumpur, following a 3.9% loss in the last five trading days, according to prices from local banks compiled by Bloomberg.
It has lost 1.2% this week. The currencyâ€™s 17% slump this year has made it Asiaâ€™s worst-performing exchange rate as a slide in Brent crude prices hurt the regionâ€™s only major net oil exporter and a funding scandal linked to Najib spooked foreign investors.
The budget will be â€œone of the most difficult,â€ Najib was quoted as saying in a The New Straits Times report on Monday.
The government aims to cut the fiscal deficit to 3.2% of gross domestic product this year from 3.5%, after amending the target from 3% in January as oil prices continued to slide. Najibâ€™s speech is due to start at 4pm.
Consumer prices in Malaysia rose 2.6% in September from a year earlier, slower than the median estimate of 2.9% in a Bloomberg survey and compared with a 3.1% increase in August, official data released today showed.
Foreign-exchange reserves climbed US$800 million in the two weeks to October 15 to US$94.1 billion, according to a Bank Negara Malaysia statement issued after markets closed yesterday. They dropped the most since 2008 last quarter. â€“ Bloomberg, October 23, 2015.