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Ringgit Falls Toward 11-Week Low as U.S. Budget Deadline Looms

Dec. 28 (Bloomberg) -- Malaysia’s ringgit fell toward an 11-week low as concern the U.S. won’t meet a year-end deadline to reach a budget agreement curbed appetite for riskier assets.

President Barack Obama will hold talks with Democratic and Republican congressional leaders today to try and resolve the impasse before at least $600 billion in spending cuts and tax increases take effect in January. Malaysia’s inflation rate held at 1.3 percent for a third month in November, the least in more than two years, a government report showed last week.

“The market is still worried about the fiscal cliff,” said Nizam Idris, head of Asian fixed-income and foreign-exchange strategy at Macquarie Bank Ltd. in Singapore. “There’ll be some cautious trading today but no signs of panic.”

The ringgit fell 0.1 percent to 3.0637 per dollar as of 4:16 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.0788 on Dec. 26, the weakest level since Oct. 11. The currency was little changed for the week and has appreciated 3.6 percent this year.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 10 basis points, or 0.10 percentage point, to 4.66 percent. It was 8.5 percent at the end of last year.

Government bonds advanced. The yield on the 3.314 percent notes due October 2017 dropped one basis point today and this week to 3.25 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: James Regan at jregan19@bloomberg.net.

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