Ringgit drops to six-year low
Liau Y-SingPublished: Mar 10, 2015 4:43 AM | Updated: Mar 10, 2015 4:55 AM
The ringgit fell to a six-year low as investors brace for an increase in US interest rates that will diminish the appeal of Malaysia’s higher bond yields.
The ringgit fell to a six-year low as investors brace for an increase in US interest rates that will diminish the appeal of Malaysia’s higher bond yields.
The extra yield investors demand to hold Malaysia’s dollar notes due in 2016 over similar-maturity Treasuries rose to the widest in 20 months Monday as local bond rates climbed. A US report on Friday showing the jobless rate dropped to the lowest in almost seven years prompted funds to raise bets for tightening by the Federal Reserve as soon as June, while Malaysia has kept borrowing costs on hold since July as oil prices plunged.
“The hiking of Fed interest rates has a clear impact on emerging markets,” said Nizam Idris, Singapore-based head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd. “As the Fed hikes rates,” the attraction of Malaysia’s yields will decrease, he said.
The ringgit declined 0.4 percent to 3.6930 a dollar as of 10.22am in Kuala Lumpur and earlier fell to 3.6945, the lowest since March 2009, data compiled by Bloomberg show. The currency has lost 1.8 percent in the past five days.
One-month implied volatility, a measure of exchange-rate swings used in pricing options, rose six basis points, or 0.06 percentage point, to 11.13 percent after reaching 11.22 percent, the highest since Jan 22.
Global funds cut holdings of Malaysian sovereign and corporate debt by 3 percent to 219 billion ringgit (US$59 billion) in January from the previous month, the lowest level since August 2013, the latest central bank data show.
Bank Negara Malaysia left its benchmark interest rate unchanged for a fourth straight meeting last week as the ringgit’s weakness reduced scope for any easing.
The difference in yield between Malaysia’s dollar bonds due in July 2016 and US debt widened to 88 basis points yesterday, the most since July 2013, data compiled by Bloomberg show. It was at 85 today.
The yield on the South-East Asian nation’s 10-year local-currency government bonds was steady at 3.97 percent after rising four basis points yesterday, when similar-maturity Treasury yields dropped five basis points to 2.19 percent.
- Bloomberg
The extra yield investors demand to hold Malaysia’s dollar notes due in 2016 over similar-maturity Treasuries rose to the widest in 20 months Monday as local bond rates climbed. A US report on Friday showing the jobless rate dropped to the lowest in almost seven years prompted funds to raise bets for tightening by the Federal Reserve as soon as June, while Malaysia has kept borrowing costs on hold since July as oil prices plunged.“The hiking of Fed interest rates has a clear impact on emerging markets,” said Nizam Idris, Singapore-based head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd. “As the Fed hikes rates,” the attraction of Malaysia’s yields will decrease, he said.
The ringgit declined 0.4 percent to 3.6930 a dollar as of 10.22am in Kuala Lumpur and earlier fell to 3.6945, the lowest since March 2009, data compiled by Bloomberg show. The currency has lost 1.8 percent in the past five days.
One-month implied volatility, a measure of exchange-rate swings used in pricing options, rose six basis points, or 0.06 percentage point, to 11.13 percent after reaching 11.22 percent, the highest since Jan 22.
Global funds cut holdings of Malaysian sovereign and corporate debt by 3 percent to 219 billion ringgit (US$59 billion) in January from the previous month, the lowest level since August 2013, the latest central bank data show.Bank Negara Malaysia left its benchmark interest rate unchanged for a fourth straight meeting last week as the ringgit’s weakness reduced scope for any easing.
The difference in yield between Malaysia’s dollar bonds due in July 2016 and US debt widened to 88 basis points yesterday, the most since July 2013, data compiled by Bloomberg show. It was at 85 today.
The yield on the South-East Asian nation’s 10-year local-currency government bonds was steady at 3.97 percent after rising four basis points yesterday, when similar-maturity Treasury yields dropped five basis points to 2.19 percent.
- Bloomberg
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