Ringgit Declines as Fed Bond-Buying Debate Deters Risk-Taking

Malaysia’s ringgit fell, touching a two-week low, after minutes of a Federal Reserve meeting showed there is a debate over the future of bond purchases that have resulted in more money flowing into emerging markets.

The MSCI Asia Pacific Index (MXAP) of stocks slid for the first time this week after several officials said the Fed should be ready to vary the pace of the $85 billion a month of debt buying, according to minutes of the Federal Open Market Committee’s Jan. 29-30 meeting released yesterday. Malaysia’s gross domestic product increased 6.4 percent last quarter from a year earlier, beating the median estimate of 5.5 percent in a Bloomberg survey, a report showed yesterday.

“Concerns over U.S. quantitative easing are reducing demand for emerging-market assets,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “The Malaysian currency could recover from the weak open given yesterday’s strong economic data.”

The ringgit declined 0.4 percent to 3.1084 per dollar as of 4:15 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.1110, the weakest since Feb. 4. One-month implied volatility, a measure of exchange-rate swings used to price options, climbed 10 basis points, or 0.1 percentage point, to 7.4 percent.

Government bonds advanced. The yield on the 3.418 percent notes due August 2022 decreased one basis point to 3.48 percent, according to Bursa Malaysia.

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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