Malaysia’s ringgit fell to an eight-week low after signs of a recovery in the US housing market bolstered the case for the Federal Reserve to scale back stimulus that’s spurred gains in emerging-market assets.
Building permits in the world’s largest economy climbed to the highest level since 2008 in October and property values increased by the most in more than seven years last quarter, data showed yesterday.
Another report indicated November consumer confidence declined to a seven-month low. Standard Chartered Plc cut its year-end forecast for the ringgit on Tuesday to 3.21 per dollar from 3.08.
“People are nervous because they still believe tapering will start some time in the later part of this year or the early part of next year,” said Wong Chee Seng, a currency strategist at Ambank Group in Kuala Lumpur. “Except for the housing prices that are showing some uptrend, the rest of the data are showing a downtrend.”
The ringgit fell 0.3 per cent to 3.2273 per dollar as of 11:30am in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.2324 earlier, the weakest since October 2. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell three basis points, or 0.03 percentage point, to 8.23 per cent.
Applications for new US construction rose 6.2 per cent to a 1.03 million annualised rate in October, beating all forecasts in a Bloomberg survey of economists, official figures showed yesterday. The S&P/Case-Shiller national home-price gauge climbed 11.2 per cent in the third quarter from the same period in 2012, the biggest year-on-year advance since the first three months of 2006.
The Fed will delay the first cut to its bond-buying programme, known as quantitative easing, until March, according to the median estimate of 32 economists in a Bloomberg News survey conducted Nov. 8.
“While we continue to believe that the Fed will only begin to taper QE3 in June 2014, we believe that markets will remain fixated on when this will happen,” Standard Chartered analysts including Singapore-based Thomas Harr wrote in the report.
Government bonds rose. The yield on the 3.48 percent notes due March 2023 fell one basis point to 4.11 per cent. — Bloomberg