Malaysia 3-Month Klibor 8.11%, Up From 8.06% Thursday

AP-Dow Jones News Service

KUALA LUMPUR -- Malaysia's three-month Kuala Lumpur Interbank Offered Rates (Klibor), along with the two other main Klibor figures, again edged up Friday in a move which again surprised some economists and dealers who had been forecasting rates to gradually turn down.

At the late morning fixing, the one-month Klibor was at 8.33%, up from 8.25% Thursday. The three-month Klibor was at 8.11%, up slightly from 8.06% Thursday, while the six-month Klibor was at 8.00%, also up very slightly from 7.99% Thursday.

Dealers said the higher rates of the past few days may have boosted interest in market participants selling the Singapore currency to buy ringgit in early trade Friday which, in turn, boosted the ringgit's value against the dollar.

At around 0333 GMT (11:33 p.m. EDT), the dollar was at 2.5133 ringgit, down from 2.5173 ringgit late Thursday.

A fixed-income analyst at a foreign house in Hong Kong, who declined to be identified, said the interbank rates had remained high several weeks after the initial attack on the baht that later spilled over to the ringgit, spurring Bank Negara Malaysia to push up rates because speculators remained ready to pounce.

'The speculators were not totally driven away,' said the analyst.

Bank Negara pushed up the rates in mid-May to stop the attack that had weakened the ringgit beyond the point where the dollar was fetching 2.5200 ringgit. On May 14, the dollar was trading as high as 2.5245 ringgit, leading Bank Negara to step in.

The central bank's efforts, which dealers said included buying ringgit as well as driving up rates, paid off, and the ringgit regained some of its strength, pushing the dollar down, so that it was trading for 2.4865 ringgit two days later, on May 16.

But the ringgit has since weakened, and this week the dollar has traded as high as 2.5190 ringgit.

While that may be worrying Bank Negara, the analyst said participants are also worried that the recent attack on the baht, which he said was continuing, might have repercussions in neighboring Malaysia.

Those fears, he explained, had convinced Bank Negara to continue to edge up rates here to attract enough investors to the ringgit to keep it from weakening too far too fast.

'Bank Negara may want to keep interest rates high for the time being,' the analyst said. 'It mainly depends on the developments in Thailand.'

The three-month Klibor, which was at 7.36% on May 14, was subsequently pushed as high as 8.50% on May 20, before edging slowly down. On May 30, the three-month rate was at 7.73% and economists said it appeared headed back down toward its pre-attack levels. But, on Monday the rate was pushed up, to 7.85%, and has steadily been edged up ever since, until Friday's fixing, when the rate was at 8.11%.