Ringgit Declines in Week as Global Growth Woes Deter Risk-Taking

Malaysia’s ringgit headed for its first weekly loss since the period ended Feb. 1, as concern the global recovery will falter damped demand for riskier assets.

A report yesterday showed Europe’s services and manufacturing contracted more than economists estimated, signaling a recession in the region could worsen. The ringgit lost 0.4 percent yesterday on concern the U.S. will cut asset purchases that have boosted dollar supply. Malaysia’s gross domestic product rose 6.4 percent last quarter from a year earlier, beating the median estimate of 5.5 percent in a Bloomberg survey, official figures showed on Feb. 20.

The ringgit declined 0.8 percent this week to 3.1015 per dollar as of 4:44 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It fell 0.2 percent today and touched 3.1142, the weakest since Feb. 4.

“The weak economic data from Europe and concern that the U.S. will cut its bond purchases are reducing demand for riskier assets,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “The Malaysian currency should continue to trade within the 3.0850 to 3.1150 range in the short term.”

One-month implied volatility, a measure of expected exchange-rate swings used to price options, was little changed today and this week at 7.4 percent.

Data from London-based Markit Economics showed yesterday a composite index based on a survey of purchasing managers in both industries in the 17-nation euro area decreased to 47.3 this month from 48.6 in January. That’s less than a reading of 49 predicted by economists in a Bloomberg survey. Fifty is the dividing line between expansion and contraction.

Government bonds in the Southeast Asian nation climbed. The yield on the 3.418 percent notes due August 2022 decreased two basis points, or 0.02 percentage point, to 3.46 percent today and for the week, according to Bursa Malaysia.

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