Friday, December 24, 2010

Ringgit at 6-week high on IPO hopes, trading thin

SEOUL: The Malaysian ringgit hit a six-week high against the dollar on Friday, Dec 24 boosted by expectations an initial public offering of a local company will attract heavy foreign equity flows.

The gains were exaggerated by the thin liquidity before holidays, with currency markets in Indonesia and Philippines closed and trading volume not expected to pick up next week.

"Many players already took leave for the end of the year," said a Singapore-based dealer.

"Markets will be also very quiet next week as investors will ''prepare for the next year," he added.

RINGGIT

The ringgit rose 0.84 percent to as firm as 3.0890 per dollar, the strongest since Nov. 11 after a media report on the possible listing of Petronas Carigali.

Petronas Carigali Sdn Bhd, the exploration unit of Petroliam Nasional Bhd, may be listed on Bursa Malaysia next year and it is expected to attract a large number of foreign funds, Business Times said on its Web site.

"Its positive and provides a pull factor for foreigners into the local bourse and this is one of the drivers of the MYR for the MYR today," a trader in Kuala Lumpur said.

"But cyclically MYR has always ended the year on a strong note." If the IPO goes ahead it would be Malaysia's largest and could be around $48.3 billion, the report said.

YUAN

The yuan rose after the People's Bank of China set a five-week-high mid-point, continuing an upward crawl for the Chinese currency over the past few days.

The yuan may appreciate a little in the near term as the '''' central bank might use the exchange rate to fight potential '' imported inflation and as it needs to create a favourable environment for President Hu Jintao's visit to the United States in mid-January, traders said.

"During the Christmas and New Year holiday, we expect the spot yuan trade may move in a small range around the central bank's fixing," said a dealer at a Chinese bank in Shanghai.

The central bank set the day's mid-point at 6.6371, the highest level since Nov. 15 and up from Thursday's 6.6466.

Dealers said the yuan could appreciate 3 to 5 percent next year on a combination of political pressure and China needing to consider its own economic situation, such as inflation brought about through higher costs of imported goods and commodities.

WON

The won edged down against the dollar in thin trading on worries about geopolitical tensions after North Korea threatened a nuclear war.

But the local currency erased much of its earlier losses on demand from'' exporters such as shipbuilders.

Won/dollar spot trading volume fell to $3.97 billion, the lowest in 2010, according to data from Seoul Money Brokerage Services Ltd and Korea Money Broker Corp. - Reuters

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