SINGAPORE (Sept 7): China is giving Malaysia a gift in the rocketing yuan.

The ringgit is among the biggest gainers in Asia over the past month, but that may not result in a higher real effective exchange rate given the yuan has the heaviest weighting in the ringgit’s real and nominal EERs. The ringgit was the most undervalued emerging-market currency after the Turkish lira as
of July 31, based on Bank for International Settlements’ data out monthly.

Given the yuan’s 2.1 percent jump in August was more than double its climb in July, the BIS’ data update -- due in two weeks -- will likely show that the ringgit remains undervalued on a real effective basis, especially since Malaysian inflation has been slowing.