Bloomberg News

Ringgit at One-Week Low as Greece Curbs Risk Taking

November 02, 2011

(Corrects conversion to percentage points in last paragraph.)

Nov. 2 (Bloomberg) -- Malaysia’s ringgit touched the lowest level in almost a week as renewed concern Greece may default damped demand for emerging-market assets.

Shares dropped across Asia after Greek Prime Minister George Papandreou announced plans for a referendum on the European Union’s rescue plan. Overseas funds cut holdings of ringgit-denominated debt in August to 167.3 billion ringgit ($54 billion), from a record 186.5 billion ringgit at the end of July, central bank data showed.

“The Greek referendum is seen as negative for riskier assets,” said Azmi Shukri Rahman, a foreign-exchange trader at CIMB Investment Bank Bhd. in Kuala Lumpur. “People are looking to buy the dollar.”

The ringgit traded little changed at 3.1265 per dollar as of 4:10 p.m. Kuala Lumpur, according to data compiled by Bloomberg. The currency fell by as much as 0.8 percent earlier and touched 3.1525, the weakest level since Oct. 27.

Greece’s referendum poses a threat to financial stability in the region, Fitch Ratings said in a statement yesterday. Zeti Akhtar Aziz, governor of Malaysia’s central bank, told reporters in Kuala Lumpur yesterday that she still needs to evaluate the extent of improvement in the economy and the risk of inflation.

“We look at both risks and the conditions are highly dynamic,” she said. “We don’t want to undermine our future prospects for growth. That is the most important because if we have high inflation, it undermines future growth.”

Malaysia’s government bonds fell. The yield on the 4.262 percent notes due September 2016 climbed one basis point, or 0.01 percentage point, to 3.33 percent, according to Bursa Malaysia.

--Editors: Sandy Hendry, Andrew Janes

To contact the reporter on 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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