Ringgit Drops Most in Six Weeks as Dollar Climbs on U.S. Data

Malaysia’s ringgit dropped the most in six weeks as the dollar rose on data signaling the Federal Reserve may increase borrowing costs this year.

Fed Bank of Philadelphia President Charles Plosser said he’s encouraged by a May 30 report that showed price gains in the economy accelerated, adding that he thinks “the rate hikes are going to come sooner than expected.” The Bloomberg U.S. Dollar Spot Index, which tracks the greenback against 10 major counterparts, snapped a two-day drop after a report last week showed U.S. durable goods orders topped economists’ forecasts.

“The U.S. dollar is stronger because of the better data such as durable goods and more positive comments from Fed officials,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “With the Chinese market closed for a public holiday, investors also opted to stay with the safe-haven greenback.”

The ringgit depreciated 0.5 percent to 3.2283 per dollar in Kuala Lumpur, halting a two-day gain, according to data compiled by Bloomberg. That’s the biggest loss since April 22. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 16 basis points, or 0.16 percentage point, to 5.52 percent.

The Fed’s preferred gauge of inflation, as measured by the personal consumption expenditures index, accelerated to 1.6 percent in April, the fastest pace since 2012, figures showed on May 30. Durable goods orders rose 0.8 percent in April, more than the 0.7 percent contraction predicted by economists.

A report on June 6 may show Malaysia’s exports climbed 9.1 percent in April, compared with 8.4 percent the previous month, according to the median forecast of analysts surveyed by Bloomberg.

Government bonds were little changed, with the yield on the 3.654 percent notes maturing in October 2019 at 3.74 percent, according to data compiled by Bloomberg. It decreased one basis point last week.

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