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Ringgit Drops as Central Bank Forecasts Slower Economic Growth

March 22 (Bloomberg) -- Malaysia’s ringgit fell toward its weakest level in almost two months after the central bank forecast slower economic growth.

Southeast Asia’s third-biggest economy may expand 4 percent to 5 percent in 2012, the monetary authority said yesterday. That is less than the Finance Ministry’s 5 percent-to-6 percent predicted in October, and a 5.1 percent pace in 2011.

“The lower GDP target raises the possibility of a rate cut,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “This will make the ringgit less attractive to investors.”

The ringgit declined 0.1 percent to 3.0800 per dollar as of 4:00 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.0890 yesterday, the weakest level since Jan 24.

One-month implied volatility, a measure of exchange-rate swings used to price options, fell eight basis points, or 0.08 percentage point, to 7.70 percent.

Five-year government bonds rose. The yield on the 4.262 percent notes due September 2016 fell seven basis points to 3.27 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: Sandy Hendry in Hong Kong at shendry@bloomberg.net.

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