Bloomberg News

Ringgit Falls to One-Month Low on Speculation ECB May Cut Rates

March 06, 2013

Malaysia’s ringgit fell to a one- month low as gains in U.S. equities and speculation that the European Central Bank will cut interest rates spurred demand for the greenback.

The U.S. Dollar Index is trading at its strongest level in more than six months after Standard & Poor’s 500 Index of U.S. shares reached its highest since 2007. Five out of 61 economists expect the ECB to lower its policy rate by 25 basis points today, according to a survey by Bloomberg. Malaysia will keep borrowing costs at 3 percent, a separate poll of 19 economists showed, before a rate decision due 6 p.m. local time.

The ringgit depreciated 0.2 percent to 3.1098 per dollar as of 9:53 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.1153, the weakest since Feb. 1. One-month implied volatility, a measure of expected moves in exchange-rates used to price options, increased six basis points, or 0.06 percentage point, to 6.72 percent.

“The dollar is rising because people are expecting the ECB to ease monetary policy, which will narrow the rate differential,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “The ringgit’s major support is at 3.1140.”

Government bonds fell. The yield on the 3.418 percent notes due August 2022 rose one basis point to 3.47 percent, according to Bursa Malaysia.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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