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Ringgit Falls to Four-Month Low as Yen Drop Fuels Export Concern

Jan. 29 (Bloomberg) -- The ringgit fell to a four-month low on speculation that a slide in the yen will hurt Malaysian exports to Japan, the third-biggest buyer of the Southeast Asian nation’s goods. Government bonds fell.

The Japanese currency has tumbled almost 14 percent against the dollar in the past six months, the worst performance among Asia-Pacific exchange rates, as Prime Minister Shinzo Abe targets an easier monetary policy. Malaysia’s central bank will keep its benchmark interest rate at 3 percent at a review on Jan. 31, according to all 21 economists in a Bloomberg survey.

“Malaysian imports into Japan might diminish,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “A depreciating yen could also mean less inward investments into Malaysia from Japan as the cost of investing would go up.”

The ringgit declined 1 percent to 3.0778 per dollar as of 10:14 a.m. in Kuala Lumpur, from 3.0490 on Jan. 25, according to data compiled by Bloomberg. The currency touched 3.0853, the weakest since Sept. 27. Malaysian financial markets were shut for a holiday yesterday, when South Korea’s won tumbled 1.7 percent and Taiwan’s dollar lost 1.1 percent.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 50 basis points, or 0.5 percentage point, to 6.27 percent.

Overseas shipments from Malaysia grew an average 1.55 percent in the first 11 months of 2012, compared with 9.6 percent a year earlier, official figures show.

The yield on the 3.314 percent notes due October 2017 climbed two basis points to 3.23 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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