Bloomberg News

Ringgit Reverses Loss on Europe Debt Agreement; Bonds Decline

October 27, 2011

Oct. 27 (Bloomberg) -- Malaysia’s ringgit rose, reversing an earlier loss, after Europe’s leaders agreed today on a plan aimed at resolving the debt crisis, easing concern export growth will cool. Bonds fell the most in two weeks.

European leaders persuaded bondholders to take 50 percent losses on Greek debt and boosted the firepower of the rescue fund to 1 trillion euros ($1.4 trillion), responding to global pressure to step up the fight against the financial crisis. Malaysia is due to report exports data for September on Nov. 4.

“Once the market calms on the good news coming out of Europe, we’ll see a stronger ringgit,” said Ahmad Zubaidi Samse, a foreign-exchange trader at Bank Muamalat Malaysia Bhd. in Kuala Lumpur. “A stronger ringgit sill remains a major theme but due to the current crisis in Europe people have become risk averse.”

The ringgit appreciated 0.6 percent to 3.1085 per dollar as of 4:39 p.m. in Kuala Lumpur, from the close on Oct. 25, according to data compiled by Bloomberg. It declined as much as 0.9 percent earlier. The currency has rallied 2.8 percent so far in October after slumping 7 percent in September, the worst monthly loss since June 1998. Local financial markets were shut yesterday for a holiday.

Malaysia’s overseas shipments in August climbed 10.9 percent from a year earlier after gaining 7.1 percent in July, according to a trade ministry statement on Oct. 7.

Government bonds declined. The yield on the 3.434 percent notes due August 2014 increased three basis points, or 0.03 percentage point, to 3.17 percent, according to Bursa Malaysia.

--Editors: Sandy Hendry, Simon Harvey

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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


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