Ringgit Reverses Drop as Malaysia to Announce Fiscal Measures

Photographer: Sanjit Das/Bloomberg

A customer hands over Malaysian ringgit banknotes to a baker at a market in the Pandamaran area of Klang, Selangor, Malaysia. The ringgit retreated 0.2 percent, the most among the 11 most-traded Asian currencies, to 3.2927 per dollar as of 10:23 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. Close

A customer hands over Malaysian ringgit banknotes to a baker at a market in the... Read More

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Photographer: Sanjit Das/Bloomberg

A customer hands over Malaysian ringgit banknotes to a baker at a market in the Pandamaran area of Klang, Selangor, Malaysia. The ringgit retreated 0.2 percent, the most among the 11 most-traded Asian currencies, to 3.2927 per dollar as of 10:23 a.m. in Kuala Lumpur, according to data compiled by Bloomberg.

Malaysia’s ringgit climbed to a two-week high, reversing an earlier decline, after an official said the government will announce measures to strengthen its fiscal position. Sovereign bonds climbed.

Prime Minister Najib Razak will unveil the measures at 6 p.m. local time in Putrajaya, the administrative capital, his spokesman Tengku Sariffuddin Tengku Ahmad, said by telephone. The Southeast Asian nation plans to delay infrastructure projects, cut subsidies and may levy a consumption tax to improve its finances, two government ministers said Aug. 29.

“They are probably going to announce steps to reduce spending,” said Andy Ji, a foreign-exchange strategist at Commonwealth Bank of Australia (CBA) in Singapore. “It’s going to have very little impact on the currency because there are structural issues to be addressed.”

The ringgit advanced 0.3 percent to 3.2760 per dollar as of 4:39 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.2708, the strongest level since Aug. 16, after earlier dropping as much as 0.4 percent. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 18 basis points, or 0.18 percentage point, to 8.89 percent.

The Federal Open Market Committee meets Sept. 17-18 to review the policy known as quantitative easing. U.S. employers added 180,000 jobs in August, after an increase of 162,000 in July, a Bloomberg survey showed before a Sept. 6 report. The Obama administration is on a campaign to persuade U.S. lawmakers that a military strike against Syria is justified.

Fed Tapering

“Markets think non-farm payrolls would affirm, rather than subtract from, sentiment that QE taper would be started,” said Vishnu Varathan, an economist at Mizuho Bank Ltd. in Singapore. “They are still watching the very dynamic and evolving situation with regard to Syria.”

Foreign ownership of Malaysian government and corporate securities declined 5.7 percent to 216 billion ringgit ($66 billion) in July, the biggest drop since September 2011, Bank Negara figures show. Overseas investors hold 28 percent of the nation’s government bonds, compared with 18 percent for Thailand, according to central bank data.

The yield on the 3.48 percent sovereign notes due March 2023 declined six basis points, or 0.06 percentage point, to 4.03 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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