Malaysian ringgit forecasts are being raised for the first time since September as rebounding oil prices limit damage to the nation’s finances.

The median year-end projection of 25 strategists rose 1.6 percent in May, the first gain in eight months, according to a Bloomberg survey. That’s more than for any other major Southeast Asian currency.

The ringgit has rallied 2.3 percent this quarter in Asia’s best performance after the Taiwan dollar as Brent crude increased 19 percent.

Malaysia’s prospects have improved since the ringgit dropped to a six-year low in March on concern the oil-exporting nation’s current account would slide into deficit for the first time since 1997.

BNP Paribas SA and Malayan Banking Bhd. raised estimates for Malaysia’s 2015 expansion after first-quarter growth beat estimates on May 15.

“The Malaysian economy proved to be very resilient through the first quarter,” said Jonathan Cavenagh, a senior currency strategist at Westpac Banking Corp. in Singapore.

“There’s still probably some downside risk to the trade numbers given how weak oil prices were late last year and earlier this year, but the market’s probably more prepared to look through that now.”

Bonds Rally

Malaysia’s $313 billion economy expanded 5.6 percent last quarter, compared with the 5.5 percent median estimate in a Bloomberg survey and a revised 5.7 percent in the previous three months.

The country outperformed neighbors Indonesia and Thailand, where gross domestic product increased 4.71 percent and 3 percent, respectively.

The median year-end forecast for the ringgit is 3.69 a dollar, compared with 3.75 on April 30.

That implies a decline of 1.9 percent from the spot rate of 3.6195 as of 11:09 a.m. in Kuala Lumpur, according to data compiled by Bloomberg.

The reassessment of the ringgit has benefited Malaysia’s local-currency sovereign bonds, which returned 1.2 percent in three months in Asia’s best performance, according to Bloomberg indexes.

The yield on the notes due September 2025 is 3.89 percent, compared with 2.20 percent for similar-maturity Treasuries, data compiled by Bloomberg show.

“Malaysian bond yields at close to 4 percent make them an attractive yield play,” said Manu George, Asian fixed-income investment director at Schroder Investment Management (Singapore) Ltd., whose bond team oversees $10 billion.

“We expect that this rally could go on as long as U.S. interest rates are held low for longer and oil prices do not relapse to their levels of last year.”

PineBridge Underweight

Brent crude fell 49 percent in the second half of 2014 and touched a six-year low of $45.19 a barrel on Jan. 13.

It’s rebounded 45 percent since then to $65.50, brightening the prospects for Malaysia, which derives 22 percent of state revenue from energy-related sources.

State finances won’t bear the full brunt of the price drop last year until this quarter and the next because the price of liquefied natural gas typically lags behind oil by as much as six months, according to PineBridge Investments.

LNG made up 8.4 percent of Malaysian exports in 2014, official data show.

“We would expect the current strength in the Malaysian ringgit to be transitory,” said Anders Faergemann, who helps oversee $3.7 billion of emerging-market debt as a senior fund manager at PineBridge in London.

“While we hope that the worst is over for Malaysia on the energy price front, we would like to see some more clarity on the revenue impact before changing our stance,” he said, adding that PineBridge holds less of the country’s debt than the industry benchmark it follows.

Commodity Prices

The first-quarter growth report prompted Maybank to raise its forecast for Malaysia’s 2015 expansion to 4.9 percent from 4.5 percent, while BNP Paribas increased its estimate to 5 percent from 4.5 percent.

GDP rose 6 percent last year.

The nation’s current-account surplus widened to 10 billion ringgit ($2.8 billion) in the first three months of the year from 5.7 billion ringgit in the previous quarter, which was the smallest excess since 2013.

Foreign-exchange reserves have recovered slightly to $106.2 billion since falling to a four- year low of $105.1 billion in March.

As well as the oil rebound, the prices of some of Malaysia’s other main commodity exports are improving.

Palm oil has risen 5.3 percent since reaching this year’s low on April 29, while rubber is up 14 percent in six weeks.

“Many of the factors that undermined the ringgit, the narrower current-account surplus and lower foreign exchange reserves, were tied to the weakness of the commodity markets,” said Dwyfor Evans, a Hong Kong based macro strategist at State Street Global Markets.

“If the bounce in commodity prices is sustained, then the ringgit should be able to stabilize.”