The decline in the Malaysian currency is boosting palm oil. The Kuala Lumpur-traded Crude Palm Oil Jul. 18 futures on vegetable and food-grade biofuel rose by up to three percent, boosting its biggest daily gain in about a year.
In addition to the exchange rates, the decline in inventories is also driving prices, said a stockbroker. According to the Malaysian palm oil authority, reserves shrank by 6.4 percent to 2.17 million tons in April. This is the lowest level for a good half year. The Ringgit fell to a four-month low, making palm oil more attractive to foreign investors. Malaysia is the world's second largest producer of this vegetable fat. The background to the pressure on the national currency is that last week the opposition surprisingly replaced the coalition Barisan Nasional (BN), which had been in power for six decades, thus triggering investor uncertainty.
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