Ringgit Leads Asia Currency Losses as U.S. Retail Sales Improve

Malaysia’s ringgit dropped the most among Asian currencies as U.S. retail sales figures topped estimates, bolstering the case for the Federal Reserve’s stimulus cuts.

The currency posted the biggest decline since November after U.S. high street sales rose 0.2 percent last month, official data showed yesterday, beating the 0.1 percent median estimate in a Bloomberg survey. The World Bank raised its 2014 global growth forecast to 3.2 percent from a June prediction of 3 percent, saying developed economies will boost exports in emerging markets.

“Asian currencies are weaker because of the stronger retail sales data,” said Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur. “The ringgit is falling more because investors tend to favor the greenback ahead of holidays,” he said, referring to Malaysia’s market closures on Jan. 17.

The ringgit slumped 0.7 percent from Jan. 13 to 3.2865 per dollar in Kuala Lumpur, the biggest drop since Nov. 21, according to prices from local banks compiled by Bloomberg. Local markets were closed yesterday for a public holiday. The Bloomberg U.S. Dollar Index, which tracks the greenback versus 10 major currencies, climbed for a second day and was headed for its best two-day gain of 2014.

One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, increased 10 basis points, or 0.10 percentage point, to 6.69 percent.

World Bank

Fed officials said in December they will cut their monthly bond purchases to $75 billion from $85 billion starting this month. The next central bank meeting is slated for the end of January. The World Bank kept its 2014 U.S. growth forecast at 2.8 percent, while cutting its estimate for developing markets to 5.3 percent from 5.6 percent.

The yield on Malaysia’s 3.26 percent sovereign bonds due March 2018 advanced two basis points to 3.60 percent, according to data compiled by Bloomberg. The rate has dropped 10 basis points so far this year.

Global funds trimmed their holdings of the nation’s debt, both corporate and government, by 1.5 percent to 232 billion ringgit ($70.7 billion) in November from the previous month, the latest central bank figures show.

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