Ringgit Falls to Seven-Month Low on BOJ, China Growth Concern

Malaysia’s ringgit fell to a seven-month low amid demand for the dollar after the Bank of Japan increased stimulus and on signs Chinese growth is slowing.

The yen declined to a seven-year low after the BOJ said Oct. 31 it will raise its annual target for expanding the monetary base to 80 trillion yen ($709 billion), up from 60 trillion yen to 70 trillion yen. China’s official Purchasing Managers’ Index trailed forecasts in October, while a gauge of services also dropped, reports showed.

“The ringgit is declining on broad dollar strength after BOJ stimulus,” said Gao Qi, a strategist at Royal Bank of Scotland Group Plc in Singapore. “China’s weaker-than-expected official PMI has caused market worries about slowing growth.”

The ringgit retreated 0.9 percent, the biggest decline since Sept. 15, to 3.3180 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. It reached 3.3195 earlier, the weakest level since Feb. 14. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 35 basis points, or 0.35 percentage point, to 6.99 percent.

Malaysia reports its trade balance and export figures on Nov. 7. Overseas shipments climbed 3 percent from a year earlier in September, compared with a 1.7 percent increase the previous month, according to the median estimate in a Bloomberg survey. Exports to China, Malaysia’s second-biggest market, fell 21.9 percent in August, an Oct. 7 report from Malaysia’s trade ministry showed.

Bonds Advance

China’s official PMI for manufacturing was 50.8 in October, missing the 51.2 median estimate in a Bloomberg survey and down from September’s 51.1, a Nov. 1 report showed. Readings above 50 indicate expansion.

Overseas holdings of Malaysian sovereign and corporate debt dropped 3 percent to 249.3 billion ringgit ($75 billion) in September from the previous month, the biggest decline since July 2013, according to central bank data.

The yield on Malaysia’s 4.181 percent sovereign bonds due July 2024 fell one basis point to 3.83 percent, after declining eight basis points in October, data compiled by Bloomberg show.

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