Bloomberg News

Ringgit Touches 1-Week Low Before Malaysian Election; Bonds Fall

May 02, 2013

Malaysia’s ringgit touched a one-week low amid uncertainty about the outcome of this weekend’s general election and the future of government policies to boost the economy. Sovereign bonds fell.

Malaysians will vote on May 5 to decide whether to extend the ruling coalition’s 55-year rule in a poll which Australia and New Zealand Banking Group Ltd. said is likely to be the closest in the nation’s history. A gauge of Chinese manufacturing declined last month, according to an HSBC Holdings Plc survey released today, while a report yesterday showed U.S. manufacturing expanded in April at the slowest pace this year and companies took on the fewest workers in seven months.

“Elections are around the corner so investors are squaring their positions,” said Zulkiflee Nidzam, head of foreign- exchange trading at Asian Finance Bank Bhd. in Kuala Lumpur.

The ringgit declined 0.4 percent from April 30 to 3.0541 per dollar as of 4:19 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.0586, the lowest level since April 24. Local financial markets were shut yesterday for a public holiday. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 20 basis points, or 0.20 percentage point, to 8.53 percent.

Prime Minister Najib Razak’s alliance has embarked on a $444 billion economic plan to transform Malaysia into a developed nation by 2020.

China and the U.S. were the third- and fourth-biggest buyers of Malaysian exports in February, when overall shipments dropped 7.7 percent from a year earlier.

The yield on the 3.26 percent notes due March 2018 rose one basis point to 3.16 percent, according to data compiled by Bloomberg.

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: James Regan at jregan19@bloomberg.net.


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