Ringgit Weakens as Export Outlook Dims on China Growth Concern

Malaysia’s ringgit erased gains as concern China’s economic growth will slow further dimmed the outlook for the nation’s exports. Government bonds rose.

The Shanghai Composite Index of stocks fell 0.9 percent, the most in almost four weeks. Citigroup cut China’s growth forecast for this year to 7.7 percent from 7.9 percent, analysts including Shuang Ding and Minggao Shen wrote in a research report dated Oct. 19. China was the second-biggest buyer of Malaysian goods in August.

“Concern that China may see slower-than-expected growth is damping demand for riskier assets,’ said Yeah Kim Leng, chief economist at RAM Holdings Bhd. in Kuala Lumpur. “Trading in the ringgit will continue to be choppy in the near-term.”

The currency weakened 0.2 percent to 3.0568 per dollar as of 5:15 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency climbed as much as 0.2 percent earlier. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 10 basis points, or 0.10 percentage point, to 6.1 percent, the least since July 20.

HSBC Holdings Plc and Markit Economics purchasing managers’ index of Chinese manufacturing was at 47.9 in September, contracting for an 11th straight month.

Malaysian government bonds rose, with the yield on the 3.418 percent notes maturing in August 2022 declining one basis point to 3.44 percent, according to Bursa Malaysia. The treasury will auction 3 billion ringgit ($982 million) of similar- maturity securities on Oct. 30, the central bank said on its website today.

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

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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