Malaysia’s ringgit was poised for its biggest monthly drop since January and sovereign bonds declined as speculation the Federal Reserve will reduce stimulus damped demand for emerging-market assets.
US consumer confidence climbed to the highest level in more than five years and home prices advanced by the most in seven, according to reports after Fed chairman Ben S Bernanke said the pace of debt purchases could be eased if the economy showed sustained signs of an improvement.
Malaysian exports fell for a third month in April, according to a Bloomberg survey before data due next week.
“The market is pricing in the fact that the Fed may pull back its stimulus soon,” said Andy Ji, a foreign-exchange strategist in Singapore at Commonwealth Bank of Australia. “Whether it’s true is still up for debate.”
The ringgit fell one per cent from April 30 to 3.0728 per dollar as of 9.54am in Kuala Lumpur, according to data compiled by Bloomberg. That was the most since a 1.6 per cent drop in January. The currency declined 1.3 per cent this week and was little changed yesterday.
Exports declined three per cent in April from a year earlier, compared with a 2.9 per cent decrease in March, according to the median estimate in the Bloomberg survey before data due June 7.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 88 basis points, or 0.88 percentage point, this month to 7.54 per cent. It climbed five basis points yesterday and 12 basis points this week.
The yield on the 3.26 per cent bonds due March 2018 increased 13 basis points this month and 14 basis points this week to 3.28 per cent, according to data compiled by Bloomberg. It fell one basis point yesterday. — Bloomberg