Ringgit Set for Worst Week Since September as Exports Decline

Malaysia’s ringgit was set for its biggest weekly drop since September as exports fell and U.S. policy makers struggled to agree on budget revisions needed to avert more than $600 billion of spending cuts and tax increases.

The currency weakened for a fifth day, the longest losing streak since August, as data today showed overseas sales declined 3.2 percent in October from a year earlier, compared with the median estimate in a Bloomberg survey for a 3 percent drop and a 2.6 percent rise in September. President Barack Obama warned yesterday that the world’s largest economy will suffer unless there’s an agreement to avoid the so-called fiscal cliff.

“As we head into year-end, the discussions on the fiscal cliff become more intense, so that would probably prompt some flight to safety,” said Enrico Tanuwidjaja, an economist at Royal Bank of Scotland Group Plc in Singapore. “Inevitably, the external headwinds will hit Asian growth.”

The ringgit dropped 0.4 percent this week, the most since the five days ended Sept. 21, to 3.0511 per dollar as of 12:16 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency retreated 0.2 percent today. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 15 basis points, or 0.15 percentage point, to 4.20 percent.

Government bonds declined. The yield on the 3.314 percent notes due October 2017 rose three basis points today and this week to 3.29 percent, according to Bursa Malaysia.

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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