Ringgit falls on gloomy Malaysia GDP data

Published: 2009/05/29

RINGGIT

MALAYSIA'S ringgit yesterday fell after a central bank report showed the economy edged closer to a recession and rising US Treasury yields dented confidence a global economic slump is easing.

The currency traded near a one-week low after Bank Negara Malaysia late on Wednesday said gross domestic product shrank 6.2 per cent in the first quarter, more than the 3.9 per cent decline predicted by economists in a Bloomberg News survey. The MSCI Asia Pacific Index of stocks fell 0.8 per cent, the most in two weeks, on concern higher borrowing costs will derail a recovery in the US, the world’s biggest economy.

“The data added to the gloom on the ringgit market,” said Tan Voon Ching, a currency trader at OSK Investment Bank Bhd in Kuala Lumpur. “It’s back to risk aversion again.”The ringgit dropped 0.5 per cent to 3.5217 per dollar as of 4.40 pm in Kuala Lumpur, according to data compiled by Bloomberg.

The currency has declined 1.4 per cent this week, after reaching a four-month high of 3.4685 on May 22.The Standard & Poor’s 500 Index fell 1.9 per cent yesterday after yields on 10-year Treasury notes rose to a six-month high.

Japan today said retail sales fell for an eighth month in April.Malaysia’s economy may shrink as much as 5 per cent this year, Prime Minister Datuk Seri Najib Razak announced yesterday. It estimated in March that gross domestic product would slide no more than 1 per cent in the worst-case scenario.

INTERBANK RATES

SHORT-term rates closed steady yesterday as Bank Negara Malaysia continued to intervene in the money market to absorb surplus funds, dealers said. As a result the overnight, one-week, two-week and three-week rates remained at 1.92 per cent, 1.94 per cent, 1.96 per cent and 1.98 per cent respectively.

The liquidity surplus in the conventional system dropped to RM24.6 billion from the RM28.3 billion estimated earlier. For Islamic funds, the total liquidity surplus declined to RM4.5 billion from an earlier estimate of RM7.3 billion. The central bank conducted a late conventional tender for RM24.6 billion of one-day money and an Al-Wadiah tender for RM4.5 billion of one-day money.

KLIBOR

THE three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) futures on Bursa Malaysia Derivatives closed lower yesterday.June 2009, September 2009, December 2009 and March 2010 dropped one tick each to 97.89, 97.86, 97.86 and 97.74 respectively.

Turnover was lower at 600 lots compared to 5,200 lots Wednesday while open interests declined to 39,304 contracts from 40,980 contracts previously.The underlying three-month KLIBOR stood at 2.13 per cent.

Meanwhile, the five-year Malaysian Government Securities futures were higher with one contract month traded. June 2009 rose 45 ticks to 110.95 with 300 lots traded. - Agencies