Bloomberg News

Ringgit Drops Most in Asia on Greek Impasse

May 15, 2012

Malaysian ringgit banknotes in various denominations are arranged for a photograph in Sydney, Australia. Photographer: Gillianne Tedder/Bloomberg

Malaysian ringgit banknotes in various denominations are arranged for a photograph in Sydney, Australia. Photographer: Gillianne Tedder/Bloomberg

Malaysia’s ringgit fell the most among Asian currencies, as Greece’s failure to form a government damped appetite for riskier assets.

The ringgit declined 1 percent to 3.1102 per dollar as of 9:47 a.m. in Kuala Lumpur, to touch its weakest level since Jan. 20, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, rose 20 basis points to 7 percent.

Post-election attempts to form a ruling coalition in Athens broke down yesterday, sending Greeks back to the polls next month with surveys giving the lead to an anti-bailout party. Prior to today, the ringgit had been the second-biggest gainer this year among 11 Asian currencies tracked by Bloomberg, after the Singapore dollar.

“The news that Greece will have new elections increases the risk of Greece exiting from the euro area,” said Thomas Harr, the Singapore-based head of Asian foreign-exchange strategy at Standard Chartered Plc. “Secondly, it’s China’s slowdown. Those two things are driving markets at the moment.”

Foreign direct investment in China fell for a sixth month in April, the longest stretch of declines since the global financial crisis, government figures showed yesterday. The country was the second-biggest buyer of Malaysian exports in March, according to official data.

Government bonds retreated. The yield on the 3.314 percent notes due October 2017 climbed two basis points, or 0.02 percentage point, to 3.31 percent, according to Bursa Malaysia.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

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


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