Ringgit Declines on Speculation Fitch Will Downgrade Malaysia

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Malaysia’s ringgit fell for a third day on speculation Fitch Ratings will downgrade the country as the U.S. moves toward raising interest rates.

Fitch, which ranks Malaysia at A-, the fourth-lowest investment grade, with a negative outlook, will review its assessment before the end of June, Andrew Colquhoun, head of Asia Pacific sovereign ratings in Hong Kong, said Wednesday. There’s more than a 50 percent chance the country’s credit rating will be downgraded, he said in March. The Bloomberg U.S. Dollar Index, which tracks the greenback versus 10 major currencies, rose 1.1 percent in the week through Thursday.

“Asian currencies are falling because of the dollar strength and on speculation that the U.S. will raise interest rates as early as September,” said Wong Chee Seng, a foreign-exchange strategist at AmBank Group in Kuala Lumpur. “The ringgit fell more because people are expecting Fitch to downgrade the country’s rating next week.”

The ringgit declined 0.2 percent to 3.7575 a dollar in Kuala Lumpur, data compiled by Bloomberg show. It dropped to 3.7690 earlier, the weakest since June 15, and has lost 6.9 percent this year in Asia’s second-worst performance.

Malaysia’s government bonds were steady. The yield on the five-year notes was 3.63 percent, while that on the 10-year securities held at 4.03 percent, according to data compiled by Bloomberg.

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