Ringgit falls as muted Chinese inflation adds to risk aversion
Malaysia’s ringgit fell after muted Chinese inflation data added to risk aversion across emerging markets following last week’s selloff in stocks and currencies.
Gauges of developing-nation currencies and stocks remained lower even after the People’s Bank of China kept its daily yuan fixing steady for a second day, spurring gains in the onshore and offshore rates. Figures at the weekend showed consumer prices in the world’s second-biggest economy increased by less than the official target, adding to concern that more measures will be needed to support growth.
Last week’s US jobs data also didn’t help the ringgit, according to Rabobank Group.
The ringgit weakened 0.3 percent to 4.3995 a dollar as of 10.25am in Kuala Lumpur after falling as much as 0.8 percent earlier, according to prices from local banks compiled by Bloomberg. The currency slumped 2.1 percent last week as the yuan posted its biggest slide since an August devaluation on speculation China may seek to depreciate its currency to prop up exports.
“No one really believes the China situation has been resolved so more panic today or at least this week,” said Michael Every, Hong Kong-based head of financial-markets research at Rabobank in Hong Kong. “There’s a knee-jerk reaction to the stronger payrolls, so they’re going to keep hiking and that’s good for the dollar.”
Factory output
US employers added 292,000 workers in December, exceeding the highest estimate in a Bloomberg survey, according to a Labor Department report on Friday. An index tracking the dollar against 10 major currencies rose to the highest level that day since at least 2004.
A report later today may show Malaysia’s factory output rose 4.1 percent in November from a year earlier, after advancing 4.2 percent the previous month, according to the median estimate in a Bloomberg survey. Brent crude fell for a sixth day, damping the outlook for Malaysia as Asia’s only major net oil exporter. The commodity is trading at its lowest level since 2004.
The FTSE Bursa Malaysia KLCI Index of shares dropped 0.5 percent, extending last week’s 2.1 percent decline. The yield on government bonds due in 2020 rose one basis point to 3.53 percent.
- Bloomberg
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