Malaysia’s ringgit fell along with other Asian currencies as U.S. housing data bolstered the dollar and a Chinese manufacturing index dropped to a 12-month low.
The ringgit weakened on speculation a jump in existing U.S. homes sales will add to the case for the Federal Reserve to increase interest rates this year. The decline in a Purchasing Managers’ Index for China, Malaysia’s second-biggest export market, follows data last week that showed the economy expanded 7 percent in the first quarter, the slowest pace since 2009.
“Some housing data came out stronger than expected, so that supported the dollar,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “We could see more easing taking place in China and that might help to reduce the risk of a negative spillover.”
The ringgit fell 0.3 percent to 3.6235 a dollar in Kuala Lumpur, according to data compiled by Bloomberg. It earlier dropped as much as 0.6 percent to 3.6335. One-month non-deliverable forwards retreated 0.8 percent to 3.6322. A Bloomberg U.S. currency gauge rose 0.1 percent.
Prime Minister Najib Razak reiterated Thursday that Southeast Asia’s third-largest economy will grow 4.5 percent to 5.5 percent this year. China’s preliminary PMI from HSBC Holdings Plc and Markit Economics was 49.2 in April, missing the median estimate of 49.6 in a Bloomberg survey and holding below the 50 threshold that signals expansion.
Malaysia’s global dollar bonds fell, with the yield on the 10-year Islamic notes sold last week climbing two basis points, or 0.02 percentage point, to 3.03 percent, data compiled by Bloomberg show. The 30-year sukuk yield rose two basis points to 4.19 percent.