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Ringgit Weakens to Three-Year Low on Current-Account Forecast

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Aug. 19 (Bloomberg) -- Malaysia’s ringgit touched a three-year low before official data this week that economists predict will show a narrower current-account surplus and faster inflation. Government bonds were little changed.

The excess in the broadest measure of trade shrank to 900 million ringgit ($274 million) in the second quarter from 8.7 billion ringgit in the previous three months, according to the median estimate in a Bloomberg survey before data due Aug. 21. Consumer prices rose 2 percent in July from a year earlier, the most since March 2012, a separate poll showed ahead of figures to be released the same day.

“Investors are looking ahead to an important week for Malaysian data,” said Nick Verdi, a Singapore-based currency strategist at Barclays Plc. “We think the market’s probably been a bit too pessimistic on the current account and that could be driving sentiment a little.”

The ringgit declined 0.2 percent to 3.2845 per dollar as of 4:16 p.m. in Kuala Lumpur after touching 3.2859 earlier, the weakest level since June 11, 2010, according to data compiled by Bloomberg. It has lost 3.8 percent this quarter, the third-worst performance among Asia’s 11 most-traded currencies. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 20 basis points, or 0.2 percentage point, to 8.56 percent.

Gross domestic product increased 4.7 percent in the second quarter from a year earlier, after rising 4.1 percent in the January through March period, according to the median estimate of economists in another Bloomberg survey ahead of central bank data due Aug. 21.

The Federal Reserve will release the minutes of its July meeting on Aug. 21, which may yield clues on when it will start cutting stimulus that has spurred inflows to emerging markets.

The yield on the 3.48 percent bonds due March 2023 was steady at 3.89 percent, data compiled by Bloomberg show.

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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