Ringgit Drops to 11-Week Low as U.S. Budget Talks Deadlocked

Malaysia’s ringgit fell to the lowest level in almost 11 weeks as speculation U.S. policy makers will miss a budget revision deadline deterred risk-taking.

The currency declined for a fifth day after lawmakers including Senator Joseph Lieberman said they were losing confidence that Congress and President Barack Obama can reach a deal to prevent more than $600 billion in tax increases and spending cuts from taking effect on Jan. 1. Malaysia’s economy will grow 4.8 percent this year and in 2013, according to economists surveyed by Bloomberg last month.

“We haven’t seen any concrete resolution of the fiscal cliff issue,” said Yeah Kim Leng, chief economist at RAM Holdings Bhd. in Kuala Lumpur. “In the short term, trading of the ringgit may still be choppy and the currency may exhibit a slight weakening.”

The ringgit declined 0.2 percent to 3.0695 per dollar as of 9:07 a.m. in Kuala Lumpur from Dec. 24, according to data compiled by Bloomberg. It touched 3.0788, the weakest level since Oct. 11, and has advanced 3.4 percent this year. Malaysian financial markets were shut yesterday for the Christmas holiday. One-month implied volatility, a measure of expected moves in exchange rates used to price options, held at 4.42 percent.

Government bonds climbed on Dec. 24. The yield on the 3.492 percent notes due March 2020 fell one basis point, or 0.01 percentage point, to 3.45 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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