Ringgit Pares Loss After GDP Growth Beats Estimates; Bonds Fall

Malaysia’s ringgit pared its daily loss after official data showed better-than-expected economic growth and the slowest inflation since March 2010. Government bonds declined.

Gross domestic product increased 5.4 percent in the second quarter from a year earlier, beating all 23 estimates in a Bloomberg survey of economists, according to figures released today by the central bank. The government reported a 1.4 percent advance in consumer prices for July, less than the median forecast for a 1.6 percent gain in a separate survey.

“The ringgit could possibly open stronger tomorrow on the back of the better-than-expected GDP data,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “Gains, however, may be limited as activity will likely slow down ahead of the Eid holiday next week.”

The ringgit closed 0.4 percent weaker at 3.1324 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. It earlier fell as much as 0.5 percent to 3.1354, the weakest level since Aug. 3.

One-month implied volatility, a measure of exchange-rate swings used to price options, rose seven basis points, or 0.07 percentage point, to 6.40 percent.

The currency will be cushioned against external weakness by Malaysia’s current-account surplus, Credit Agricole CIB said in a report today. The surplus as a percentage of GDP is the second-largest in Asia, according to the report.

Malaysia’s five-year bonds declined. The yield on the 3.314 percent notes due October 2017 rose three basis points to 3.35 percent, the highest level since the debt was sold in April, according to Bursa Malaysia.

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