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Ringgit Declines Most in a Month on Global Slowdown Concern

Malaysia’s ringgit fell the most in a month as concern the global economic recovery is stalling damped demand for riskier assets. Government bonds were steady.

Asian shares dropped today after reports this week showed Chinese first-quarter gross domestic product and March industrial production expanded less than analysts estimated. Asia’s largest economy was the third-largest buyer of Malaysian goods in February. The International Monetary Fund on April 16 trimmed its worldwide growth forecast to 3.3 percent this year from 3.5 percent.

“There are growth concerns about the global economy and fairly weak or non-existent risk appetite,” said Andy Ji, a foreign-exchange strategist in Singapore at Commonwealth Bank of Australia. “There are still concerns lingering about the Chinese economy.”

The ringgit retreated 0.3 percent, the most since March 15, to 3.0353 per dollar as of 10:10 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in exchange rates used to price options, climbed nine basis points, or 0.09 percentage point, to 7.26 percent.

Malaysian inflation quickened to 1.6 percent in March from 1.5 percent in February, matching the median estimate of economists surveyed by Bloomberg, according to a government report yesterday. Bank Negara Malaysia is likely to keep interest rates on hold, at least until 2014, Deutsche Bank AG said in a research note.

The ringgit and the Malaysian stock market will plunge if the ruling Barisan Nasional coalition loses the May 5 general election, Prime Minister Najib Razak said in an interview yesterday.

The yield on the 3.26 percent sovereign bonds due March 2018 was 3.16 percent, according to data compiled by Bloomberg.

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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