Malaysian ringgit declined the most in more than two weeks before a report that economists forecast will show exports declined in February. Government bonds were little changed.
Overseas sales fell 4.4 percent from a year earlier, after rising 3.5 percent in January, according to the median estimate in a Bloomberg survey before data due April 5. There remains considerable downside risk to the global outlook, with concern Europe’s debt crisis could worsen, the central bank said March 20. The country must hold elections by the end of June.
“Global growth uncertainties are going to weigh on emerging countries,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. The ringgit will probably trade in a narrow range until the elections, he said.
Twelve-month non-deliverable forwards fell 0.2 percent to 3.1523 per dollar as of 4:35 p.m. in Kuala Lumpur, the biggest drop since March 15, according to data compiled by Bloomberg. Non-deliverable forwards are settled in dollars. The contracts to fix an exchange rate in a year’s time were at a 1.9 percent discount to the spot rate, which was little changed at 3.0925.
One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, rose two basis points, or 0.02 percentage point, to 6.85 percent.
Global funds held 218 billion ringgit ($70.5 billion) of Malaysian bonds in February, compared with 229 billion ringgit in January, according to data from Bank Negara. PineBridge Investments is underweight ringgit bonds on uncertainties over the outcome of the election, Natasha Smirnova, vice president of emerging-market fixed income in London, said March 26.
“There’s hesitancy on bond purchases in general,” Supaat said. “People are still buying selectively but it’s controlling the flows in a big way until the elections.”
The yield on the 3.26 percent sovereign notes due March 2018 held at 3.22 percent, according to data compiled by Bloomberg.