Ringgit declines for fourth day
Malaysia’s ringgit fell for a fourth day, the longest losing streak in a month, as US budget talks damped demand for riskier assets. Bonds retreated.
The US Senate will hold a test vote today on legislation passed by the House of Representatives to cover federal spending through December 15 and choke off funds for President Barack Obama’s health-care law. Malaysia’s plan to seek approval for about US$4.3 billion in extra spending could derail the government’s target to reduce the budget deficit to four per cent in 2013 from 4.5 per cent last year, according to Hong Leong Bank Bhd.
"The US still has the budgetary discussions, which are going on," said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia. "There’s a pare-back in risk appetite."
The ringgit fell 0.3 per cent to 3.2222 per dollar as of 4.08pm in Kuala Lumpur, adding to a two per cent loss in the last three days, data compiled by Bloomberg show. The Bloomberg US Dollar Index was little changed, after climbing 0.2 per cent yesterday. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 28 basis points, or 0.28 percentage point, to 10.34 per cent.
Malaysia’s Deputy Finance Minister Datuk Ahmad Maslan tabled a parliamentary bill this week to request RM14.1 billion in additional spending to pay civil servants’ salaries, according to a September 23 report in the local Edge newspaper.
"The proposed supplementary bill has dented some of the confidence that we’ll be able to meet the four per cent budget- deficit target," said Choong Yin Pheng, senior manager for fixed income and economic research at Hong Leong Bank. "All this is not very positive for the ringgit."
The yield on the 3.26 per cent sovereign notes due March 2018 rose three basis points to 3.56 per cent, according to data compiled by Bloomberg.-- Bloomberg