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Ringgit halts three-day rally as Greece concern boosts dollar
[KUALA LUMPUR] Malaysia's ringgit fell, halting a three-day gain, as lingering concern that Greece will be unable to meet its debt obligations without a further cash injection from donors damped risk appetite.
A dollar gauge climbed for a second day following last week's slump as Greece Prime Minister Alexis Tsipras ordered local governments to move funds to the central bank as he seeks to meet commitments for salaries, pensions and a payment to the International Monetary Fund. Malaysia's central bank governor said at the weekend that the ringgit, Asia's worst performer in the past six months partly due to a slump in oil, is undervalued. Brent crude resumed its decline Tuesday.
"The situation in Europe is looking increasingly precarious," said Nizam Idris, head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd. in Singapore. "That kind of uncertainty benefits the dollar." The ringgit fell 0.6 percent to 3.6445 a dollar as of 10 am in Kuala Lumpur, according to data compiled by Bloomberg. The currency advanced 2.3 per cent in the last three days, trimming its six-month loss to 10.5 per cent. The Bloomberg Dollar Spot Index climbed 0.2 per cent.
The slump in crude since June drove the ringgit to a six- year low in March as revenues deteriorate for Asia's only major oil exporter. Markets have "the wrong perception of the degree of dependence of the Malaysian economy on the oil and gas sector," central bank Governor Zeti Akhtar Aziz said in an interview in Washington Saturday.
A report Wednesday may show inflation accelerated to 0.9 per cent in March from a year earlier, after February's 0.1 per cent gain, according to the median estimate in a Bloomberg survey. Malaysia's current interest rates are accommodative and conditions now are allowing the central bank to maintain borrowing costs "at these levels," Ms Zeti said, referring to the benchmark 3.25 percent policy rate.
Malaysian government bonds were little changed, with the 10-year yield at 3.89 per cent, data compiled by Bloomberg show.