Ringgit Sees Longest Losing Weekly Streak Since 2005; Bonds Fall

Malaysia’s ringgit posted its worst weekly losing streak since 2005 and government bonds fell as signs of a strengthening U.S. economy bolstered the case for the Federal Reserve to trim stimulus.

U.S. jobless claims in the week ended Nov. 16 fell to 323,000, the least since September and lower than the median forecast in a Bloomberg survey, a report showed yesterday. Inflation in Malaysia accelerated to a 22-month high of 2.8 percent in October, a government report showed today.

“The short-term outlook is negative toward emerging markets, largely due to Fed tapering speculation,” said Nik Mukharriz Muhammad, a Kuala Lumpur-based fixed-income analyst at CIMB Investment Bank Bhd., a unit of Malaysia’s second-largest lender. “You don’t really want to go too far long on bonds right now.”

The ringgit retreated 0.5 percent this week, the fifth straight decline, and fell 0.4 percent today to 3.2173 per dollar in Kuala Lumpur. That’s the longest stretch of losses since November 2005. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 42 basis points from Nov. 15 and 15 basis points today to 8.21 percent.

Tapering Concern

Citigroup Inc. is neutral on the ringgit with “tapering fears back in force,” strategists including Singapore-based Siddharth Mathur wrote in a research note yesterday.

Barclays Plc is most bullish on the ringgit among emerging-market Asian currencies and most bearish on the Indonesian rupiah, its Singapore-based analyst Hamish Pepper said in an interview today. “Next week may be sweet spot time for the ringgit to rebound given the light data week and holiday in the U.S.,” Pepper said.

Fed Bank of St. Louis President James Bullard, a voter on policy this year who has backed record stimulus, said a strong jobs report could increase the probability of tapering in December. The Fed will delay the first cut to its bond buying program until March, according to the median estimate of 32 economists in a Bloomberg News survey conducted Nov. 8.

The yield on Malaysia’s five-year sovereign bonds rose nine basis points, or 0.09 percentage point, this week to 3.65 percent, the highest level since Sept. 2, according to data compiled by Bloomberg. The rate was little changed today. The yield on the 3.48 percent securities maturing March 2023 advanced 18 basis points for the week to 4.11 percent, the highest since July 31. It climbed four basis points today.

Before it's here, it's on the Bloomberg Terminal.