Ringgit Falls to One-Week Low as India Easing Spurs Rate-Cut BetLiau Y-Sing
Malaysia’s ringgit dropped to the lowest level in more than a week after interest-rate cuts in India and China spurred speculation the Southeast Asian nation’s central bank will take similar steps.
The Reserve Bank of India lowered its benchmark repurchase rate to 7.5 percent from 7.75 percent in an unscheduled move Wednesday, after China announced a cut of a quarter percentage point each in its key lending and deposit rates Feb. 28. Bank Negara Malaysia will review policy Thursday after data last month showed consumer prices rose at the slowest pace in more than five years in January.
“Considering what’s happened in India today and that China also cut, people are factoring in the possibility of a cut tomorrow for Malaysia,” said Sean Yokota, the Singapore-based head of Asian strategy at Skandinaviska Enskilda Banken AB. “Everybody’s facing similar things where inflation is coming in much lower than expected.”
The ringgit depreciated 0.6 percent to 3.6470 a dollar in Kuala Lumpur, according to data compiled by Bloomberg. It earlier fell to 3.6495, the lowest since Feb. 20.
Malaysia’s central bank has kept its benchmark rate at 3.25 percent after increasing it by 25 basis points in July. Consumer prices climbed 1 percent in January from a year earlier, the slowest since November 2009, a Feb. 18 report showed. More than a dozen central banks from Turkey to China have eased policy in 2015 as a slide in oil prices damps inflation.
Bank Negara will keep its benchmark rate at 3.25 percent Thursday, according to all 18 economists surveyed by Bloomberg. While one-year interest-rate swaps are still pricing in an increase, the contracts fell two basis points in the past two days to 3.69 percent.
Malaysian government bonds rose, with the yield on three-year notes declining two basis points, or 0.02 percentage point, to 3.44 percent, data compiled by Bloomberg show.