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Ringgit Declines on Chinese Manufacturing Report, Fed Minutes

Malaysia’s ringgit fell the most in a month after a gauge of manufacturing in China, the nation’s biggest export market, trailed estimates and minutes of a Federal Reserve meeting signaled stimulus cuts would continue.

A preliminary reading for the Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was 48.3 this month, lower than the 49.5 median estimate in a Bloomberg survey. Several U.S. policy makers reaffirmed a pledge to continue trimming stimulus in “the absence of an appreciable change in the economic outlook,” according to minutes of the Federal Open Market Committee’s January meeting released yesterday.

“Overnight, the dollar was stronger on the FOMC minutes,” said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia. The manufacturing report was also negative for the ringgit, although the survey is more of a sentiment barometer than an accurate indicator, he said.

The ringgit dropped 0.5 percent, the biggest loss since Jan. 20, to 3.3095 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. The currency has declined 3.9 percent over the past three months.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 16 basis points, or 0.16 percentage point, to 6.79 percent.

Exports Outlook

Malaysian exports increased 14.4 percent in December from a year earlier, the fastest pace since October 2011, a government report showed this month.

“The weaker China PMI data raises concerns about near-term growth in China and the impact on Asian economies,” said Khoon Goh, a Singapore-based strategist at Australia & New Zealand Banking Group Ltd.

Malaysian inflation accelerated to a two-year high of 3.4 percent in January, official data showed yesterday. ANZ forecasts the central bank will raise interest rates in the third quarter and sees a total of 50 basis points of increases by year-end, economists including Singapore-based Glenn Maguire wrote in a research note yesterday.

The yield on the 4.181 percent sovereign bonds due July 2024 rose one basis point to 4.12 percent, according to data compiled by Bloomberg.

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