Ringgit slips from a 19-month high

MALAYSIA'S ringgit weakened on speculation China will tighten lending curbs to stem inflation, tempering the outlook for growth in Asian exports.

The currency slipped from near a 19-month high against the dollar after China banned loans to developers hoarding land to wait for higher prices, the China Securities Journal reported today. China, which has twice raised banks’ reserve ratios this year, overtook Singapore as Malaysia’s biggest export market in January, official statistics show.

“China issues are grabbing the centre stage, causing market players to be a bit on the cautious side,” said Azmi Shukri Rahman, a foreign-exchange trader at CIMB Investment Bank Bhd. in Kuala Lumpur.

“The quarrel with the U.S. on the yuan is a concern.”



The ringgit declined 0.3 per cent to 3.3050 per dollar as of 9.20 am in Kuala Lumpur, according to data compiled by Bloomberg.

The currency earlier reached 3.2920, approaching a 19-month high of 3.2910 set on March 12.

Stock inflows will drive the ringgit to 3.27 next week, Azmi said.

The Kuala Lumpur Composite Index of local shares gained 0.2 percent today, near a two-year high set on March 11.

China’s economy grew 10.7 per cent last quarter, the fastest since 2007.

Premier Wen Jiabao on March 14 rebuffed criticism on its stable yuan policy, prompting investors to pare bets on yuan appreciation in the forwards market. - Bloomberg