Zeti Spurning Rate Cut May Halt Malaysia Rally

The rally in ringgit-denominated Islamic bonds that pushed yields to an eight-month low will end after the central bank ruled out a cut in interest rates, according to CIMB Group Holdings Bhd. and RHB Capital Bhd.

Yields may rise after Bank Negara Malaysia Governor Zeti Akhtar Aziz said in an interview that the benchmark policy rate of 3 percent is supportive of economic growth ahead of a March 9 review, RHB Capital and CIMB Group say. Yields on 3.505 percent notes due in September 2014 dropped for a third month in February and have fallen 33 basis points to 3.14 percent from a June 30 peak, according to Bursa Malaysia.

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