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Ringgit Little Changed; Data Shows Inflation at Two-Year Low

Jan. 23 (Bloomberg) -- Malaysia’s ringgit was little changed, after advancing in early trade on a report that showed German investor confidence rebounded, allaying concern about Europe’s growth outlook.

The ringgit traded at 3.0416 per dollar as of 5:25 p.m. in Kuala Lumpur, compared with yesterday’s close of 3.0424, data compiled by Bloomberg show. It climbed as much as 0.3 percent earlier to 3.0333.

The ZEW Center for European Economic Research in Mannheim said yesterday its index of investor and analyst expectations jumped to 31.5 in January, the highest in 2 1/2 years. Official data issued in late trading showed consumer prices in Malaysia rose 1.2 percent in December from a year earlier, the least since 2010. That compares with a 1.3 percent advance in November and the 1.4 percent gain forecast by economists in a Bloomberg News survey.

“Fears of Europe’s core slipping into a deep recession are receding,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “It’s not like the European situation has turned completely rosy, but at least there won’t be an imminent implosion.”

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, held at 5.37 percent.

Election Concerns

The currency touched 3.0500, the weakest level since Jan. 8, on concern Malaysia’s government will call an early election that may loosen its grip on power.

Prime Minister Najib Razak must dissolve parliament by April 28. His approval rating dropped to a 16-month low in December, the Merdeka Center for Opinion Research said in a Jan. 10 statement. The benchmark FTSE Bursa Malaysia KLCI Index of shares rose 0.4 percent today, after sliding 2.9 percent in the last two days.

Government bonds advanced. The yield on the 3.172 percent notes due July 2016 fell one basis point, or 0.01 percentage point, to 3.14 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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