The ringgit fell the most in three weeks amid an emerging-market sell off in stocks and bonds.
The currency dropped as much as 1 percent against the dollar before Friday’s U.S. jobs report, which may give a clearer picture as to the strength of the economic recovery and the timing of the Federal Reserve’s policy tightening. Concern that China’s growth is slowing, along with Greece’s debt woes, are also weighing on sentiment, according to Rabobank Group. Malaysia’s central bank kept interest rates unchanged Thursday.
“A lot of people are unclear about what’s going on and aren’t making large bets either way,” said Michael Every, head of financial markets research at Rabobank in Hong Kong. “At the same time, you’ve had such a big rally in the dollar, such a big rally in equities and such a big rally in bonds. So many people just want to lock in some profits.”
The ringgit weakened 0.7 percent to 3.5942 a dollar in Kuala Lumpur, after strengthening 1.2 percent Wednesday, data compiled by Bloomberg show. One-month non-deliverable forwards dropped 0.7 percent to 3.6021.
Twenty-one of 22 economists surveyed by Bloomberg predicted Malaysia’s central bank would keep the overnight policy rate at 3.25 percent, while one forecast a 25 basis-point cut.
Earlier in the day, a report showed exports unexpectedly increased in March from a year earlier, rising 2.3 percent compared with the 5 percent contraction forecast in a Bloomberg survey and the previous month’s 9.7 percent drop. The trade surplus climbed to 7.8 billion ringgit ($2.2 billion) from a revised 4.56 billion ringgit.
One-month implied volatility in the currency rose for a seventh day, the longest stretch since October. It increased 24 basis points to 11.12 percent and reached a three-month high of 11.26 percent.
Government bonds fell for a second day. The 10-year yield rose three basis points, or 0.03 percentage point, to 3.90 percent. The three-year yield was also up three basis points at 3.33 percent.