Malaysia’s ringgit dropped the most in 19 months after the U.S. signaled it may taper its monetary stimulus, damping demand for emerging-market assets. Government bonds fell.
The Dollar Index, which tracks the greenback against the currencies of six U.S. trade partners, climbed 0.9 percent this week. Stocks and commodities fell today after Federal Reserve Chairman Ben S. Bernanke said the monetary authority may start cutting bond purchases, known as quantitative easing, this year if risks to the economy abate. Malaysia reported this month exports contracted 3.3 percent in April from a year earlier, compared with the median estimate of a 0.4 percent growth.
“The ringgit, like other Asian currencies, is falling because of concern over QE,” said Vishnu Varathan, an economist at Mizuho Corporate Bank Ltd. in Singapore. “The Malaysian currency is dropping more because the nation, being a net exporter of crude oil and palm, will be affected as a stronger dollar will reduce demand for commodities.”
The ringgit slumped 1.6 percent to 3.2021 per dollar as of 9:55 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. That’s the most since Nov. 1, 2011.
One-month implied volatility, a measure of exchange-rate swings used to price options, advanced 66 basis points, or 0.66 percentage point, to 9.77 percent today, the highest since Jan. 27, 2012.
Government bonds slid. The yield on the 3.48 percent notes due March 2023 increased 18 basis points to 3.69 percent, the highest since they were sold in March, according to data compiled by Bloomberg.
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