Bloomberg News

Ringgit Drops Toward One-Month Low on Europe Crisis; Bonds Gain

November 17, 2011

Nov. 17 (Bloomberg) -- Malaysia’s ringgit fell toward a one-month low as Europe’s worsening debt crisis spurred investors to seek safer bets than emerging-market assets. Government bonds advanced for a third day.

Fitch Ratings said yesterday the deepening fiscal problems in Europe pose a “serious risk” to U.S. banks. Malaysian third-quarter gross domestic product rose 4.8 percent from a year earlier, from 4 percent in the preceding three months, according to the median estimate in a Bloomberg survey before data due tomorrow.

“Regional currencies, including the ringgit, are being affected by the global sentiment,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore.

The ringgit weakened 0.1 percent to 3.1555 per dollar as of 4:23 p.m. in Kuala Lumpur, extending this month’s loss to 2.6 percent, according to data compiled by Bloomberg. The currency touched 3.1705 yesterday, the lowest level since Oct. 10. The ringgit may reach 3.18 this week, Supaat said.

Malaysia’s economic growth this year will be closer to 5 percent than 6 percent amid a “less than benign” global economy, Prime Minister Najib Razak told reporters in Honolulu on Nov. 12.

The yield on Malaysia’s 3.434 percent notes due August 2014 fell two basis points, or 0.02 percentage point, to 3.09 percent, according to Bursa Malaysia. That was the lowest level since Sept. 20.

Inflation has peaked and stabilized, Bank Negara Malaysia Governor Zeti Akhtar Aziz told reporters in Kuala Lumpur on Nov. 15. Consumer prices rose 3.4 percent in September from a year earlier after climbing 3.3 percent in August, official data show. Policy makers kept the benchmark overnight policy rate at 3 percent for a third straight meeting on Nov. 11.

--Editors: Andrew Janes, 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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