Bloomberg News

Ringgit Hits 14-Month Low as Europe Debt Woes Curb Risk-Taking

October 03, 2011

Oct. 3 (Bloomberg) -- Malaysia’s ringgit sank to a 14-month low as concern Europe’s debt crisis will worsen, deterring risk- taking and sapping demand for emerging-market assets.

The currency weakened for a fourth day as investors favored the relative safety of the greenback, driving the Dollar Index to its highest level since January, before European finance ministers meet today to weigh the threat of a Greek default. Overseas investors trimmed their holdings of ringgit-denominated debt in August to 186 billion ringgit ($58 billion), from a record 186.5 billion ringgit at the end of July, central bank data show. That’s the first reduction since November.

“Risk aversion is back in play,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ in Kuala Lumpur. “Lingering concerns over Europe’s debt crisis will continue to weigh on emerging-market assets.”

The ringgit fell 0.4 percent to 3.2055 per dollar as of 4:16 p.m. in Kuala Lumpur, after a 7 percent slide in September that was the biggest loss since 1998, according to data compiled by Bloomberg. The currency touched 3.2200, the weakest level since July 22, 2010.

Greece’s government approved 6.6 billion euros ($8.8 billion) of austerity measures, including firing state workers, to trim its budget deficit and qualify for bailout funds. The nation is seeking to secure disbursement of an 8 billion-euro loan payout this month and a second rescue of 109 billion euros agreed to by European Union leaders on July 21.

Malaysia’s government bonds were unchanged. The yield on the 3.434 percent notes due August 2014 held at 3.23 percent, according to Bursa Malaysia.

--Editor: Barry Porter

%MYR

To contact the reporter responsible for this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.


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