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Ringgit Retreats for Fourth Day on Stalling U.S. Budget Talks

Malaysia’s ringgit declined for a fourth day as signs U.S. budget talks are stalling weakened demand for emerging-market assets.

The currency dropped to a one-month low after President Barack Obama on Dec. 21 called for an interim bill to prevent tax increases for middle-income Americans while a solution is sought to avert more than $600 billion in automatic spending cuts and higher taxes. Malaysian exports fell for the third time in four months in October, government data showed this month, and the economy is officially forecast to grow 4.5 percent to 5.5 percent next year.

“There are a lot of concerns about the fiscal cliff,” said Nizam Idris, head of Asian fixed-income and foreign- exchange strategy at Macquarie Bank Ltd. in Singapore. “It’s not an exciting economic growth trajectory for Malaysia.”

The ringgit retreated 0.3 percent to 3.0729 per dollar as of 8:46 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.0734, the weakest since Nov. 19, and has gained 3.1 percent this year. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 11 basis points to 4.53 percent.

Government bonds were steady Dec. 21. The yield on the 3.314 percent notes due October 2017 held at 3.26 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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