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Ringgit Weakens Vs. Dollar

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KUALA LUMPUR: Malaysia’s ringgit fell the most in almost two weeks as the dollar rallied before the Federal Reserve issues the minutes of its April meeting, which may shed more light on when it will raise interest rates.

A gauge of the greenback has gained 1.3% two days, after declining in each of the last five weeks. Malaysia will publish last month’s inflation data on Friday, after central bank governor Tan Sri Dr Zeti Akthar Aziz said she would review the target should crude oil prices exceed US$70 a barrel. The currency has appreciated 3% this quarter as Brent climbed 19% to above US$65.

“The expectation will be for the Fed to maintain its call that it’s still looking for a rate hike this year and that will keep the dollar supported,” said Choong Yin Pheng, senior manager for bonds and economic research at Hong Leong Bank Bhd. “The market has started to build in hopes that the weaker dollar that we’ve seen could potentially help the United States recover.”

The ringgit retreated 0.6%, the biggest decline since May 7, to 3.5915 a dollar in Kuala Lumpur, according to data compiled by Bloomberg. It fell 0.7% in the five days to May 15.

Malaysia’s economic growth slowed last quarter as exports weakened, according to official figures on May 15. Gross domestic product rose 5.6% from a year earlier, after climbing a revised 5.7% in the final quarter of 2014.

The current-account surplus widened to RM10bil from RM5.7bil, easing concern that government finances would deteriorate for the oil exporter with Brent down from last year’s high of more than US$100.

The South-East Asian nation’s economy is stable, Prime Minister Datuk Seri Najib Tun Razak said in Kuala Lumpur yesterday. The Government is confident that state investment company 1Malaysia Development Bhd will lower its debt, an issue that’s drawn criticism from lawmakers and dented investor sentiment.

Malaysia’s sovereign bonds were little changed, with the 10-year yield at 3.88%, data compiled by Bloomberg show. It fell two basis points, or 0.02 percentage point, last week. – Bloomberg

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