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Ringgit Rises From Near 11-Week Low as U.S. Holds Budget Talks

Dec. 31 (Bloomberg) -- Malaysia’s ringgit climbed from near an 11-week low as U.S. policy makers continue negotiations to avert the so-called fiscal cliff of more than $600 billion in spending cuts and tax increases set to take effect tomorrow.

Senate Majority Leader Harry Reid said yesterday significant differences remain between Democrats and Republicans as both parties work to bridge gaps over income tax rates, the estate tax and other issues. Total loan applications in the Malaysian banking system contracted 19 percent in November from a year earlier, compared with a 0.4 percent drop in October, according to a Dec. 28 central bank report.

“The fiscal cliff issue has to be resolved in some way and the market is waiting,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. “It’s still in suspense.”

The ringgit advanced 0.2 percent to 3.0583 per dollar as of 4:05 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It closed at 3.0640 on Dec. 28, near the 3.0788 level reached on Dec. 26, which was the weakest since Oct. 11. The currency has gained 3.6 percent this year. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 14 basis points, or 0.14 percentage point, to 4.81 percent.

Government bonds were steady. The yield on the 3.314 percent notes due October 2017 held at 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: Amit Prakash at aprakash1@bloomberg.net

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