Malaysia’s ringgit was headed for its biggest weekly loss in a month after the central bank left borrowing costs unchanged at a second straight meeting, citing a slowing global economy.
Bank Negara Malaysia kept its overnight policy rate at 3 percent yesterday, joining counterparts in South Korea, Indonesia and Philippines who also held off from raising interest rates. The Dollar Index traded on ICE Futures in New York fell after Chairman Ben S. Bernanke said the Federal Reserve is ready to take steps to ensure a stronger economic recovery in the world’s largest economy.
“Slower growth globally is being priced in by the markets,” said Jasmine Poh, a Singapore-based currency and rates strategist at BNP Paribas SA. “Asian currency gains are still there over the medium term on stronger fundamentals versus the U.S. and the euro zone” even if rates are maintained, she said.
The ringgit slumped 1 percent this week to 2.9940 per dollar as of 9:05 a.m. in Kuala Lumpur, its biggest drop since the five-day period Aug. 5. It was little changed from yesterday, according to data compiled by Bloomberg.
“Prolonged uncertainties in the financial markets, weakness in the labor market and the prevailing fiscal conditions in the advanced economies have heightened the downside risks and fragility of the global economy,” Bank Negara said in its policy statement. “In the domestic economy, recent indicators point to slower growth in external demand.”
Malaysia’s exports grew 7.1 percent in July, easing from a revised 9.6 percent in June, the trade ministry said in a statement yesterday. Growth averaged 6.8 percent this year, compared with 26 percent in the same period of 2010.
Bank of America Corp. cut its 2011 and 2012 growth forecasts for the Malaysian economy on Aug. 5. HSBC Holdings Plc cut its U.S. growth forecast in a Sept. 6 research report, putting it on “recession watch” for the rest of the year.
Bloomberg
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