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Ringgit Slides Most in a Month as U.S. Data Adds to Taper Bets

April 22 (Bloomberg) -- Malaysia’s ringgit dropped the most in a month as improving U.S. data added to speculation the Federal Reserve will end stimulus this year.

The Bloomberg U.S. Dollar Spot Index, which tracks the greenback against 10 major counterparts, reached a two-week high before data tomorrow that economists forecast will show new home sales in the world’s largest economy rose last month. A report yesterday showed the Conference Board’s index of leading indicators posted the biggest advance in four months in March. The ringgit was the worst performer among Asia’s 11 most-traded currencies today after the Indonesian rupiah.

“Recent data showed the U.S. economy is improving and that has reinforced expectations that the Fed may end its bond purchases this year,” said Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur. “That has also helped lift sentiment on the dollar.”

The ringgit depreciated 0.5 percent to 3.2670 per dollar in Kuala Lumpur, a third day of declines and its longest losing streak since March 21, according to data compiled by Bloomberg. It touched a two-week low of 3.2681 earlier.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed seven basis points, or 0.07 percentage point, to 6.56 percent.

Bond Risk

The Fed started trimming its bond-purchase program this year in $10 billion increments as the U.S. economy picks up. The nation’s gross domestic product will increase 2.8 percent this year, more than the 1.9 percent pace in 2013, according to April estimates from the Washington-based International Monetary Fund.

The cost of insuring Malaysian sovereign bonds using five-year credit-default swaps retreated to 99.5, the lowest level since April 10, from 99.6 yesterday, according to data provider CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Malaysia’s 10-year government notes were little changed, with the yield on the 4.181 percent securities maturing in July 2024 at 4.09 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey

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