Nov. 13 (Bloomberg) -- Malaysia's ringgit fell to the lowest in almost two years on speculation the global credit- market crisis will deepen, prompting investors to stay away from emerging-market assets. Bonds gained.

Sliding prices of crude oil and palm oil, which together account for 15 percent of Malaysia's exports, have also helped drag the ringgit lower in recent months. The currency has slid about 10 percent since crude oil reached a record $147.27 per barrel on July 11. Crude costs dropped 63 percent in that time and palm oil more than halved.

``Market participants are likely to dine on burnt toast as increasing risk concerns are likely to deliver new-territory moves for currencies,'' said David Croy, a strategist in Wellington at ANZ Investment Bank. ``Risk aversion is on the rise'' on worries over the unraveling of economic support packages, he said.

The ringgit traded at 3.5955 per dollar as of 4:40 p.m. in Kuala Lumpur versus 3.5935 late yesterday, according to data compiled by Bloomberg. It fell as much as 0.6 percent to 3.6163, the weakest since December 2006.

The currency slid for a third day as Asian stocks extended a global rout that has erased more than $29 trillion of wealth this year. Shares fell on U.S. Treasury Secretary Henry Paulson's plan to use half of a $700 billion rescue package to help relieve pressures on consumer credit, rather than buy devalued mortgage assets. A government report today showed the German economy, Europe's largest, entered its worst recession in 12 years.

Yields on emerging-market debt are 6.53 percentage points higher than yields on U.S. Treasuries, according to the JPMorgan EMBI+ Index. The risk premium rose 61 basis points yesterday to near a two-week high. A basis point is 0.01 percentage point.

Bonds Rise

Three-year notes rose for a third day after Bank Negara Malaysia said it has the flexibility to cut interest rates because inflation in Southeast Asia's third-largest economy has peaked, state-run Bernama news agency reported yesterday.

The yield on the 3.833 percent note due in September 2011 fell 5 basis points to 3.60 percent, the lowest in five months, according to Bursa Malaysia Bhd. The price jumped for a third day, gaining 0.13 or 1.3 ringgit per 1,000 ringgit face amount, to 100.63.

Malaysia's inflation rate fell to 8.2 percent in September from a 26-year high of 8.5 percent the previous month. The central bank left its overnight policy rate at 3.5 percent on Oct. 25 and next meets to set borrowing costs on Nov. 24.

Malaysia sold 3 billion ringgit ($834 million) of 2014 bonds at an average yield of 3.751 percent at an auction, according to results published by Bank Negara Malaysia on its Web site. Investors submitted bids for 1.8 times the amount on offer, the central bank said. The so-called bid-to-cover ratio averaged 1.91 times in 14 previous bond sales of various maturity debt this year.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

Last Updated: November 13, 2008 04:17 EST