Malaysia’s Ringgit Drops on Differing Monetary Policies

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Malaysia’s Ringgit Drops on Differing Monetary PoliciesThe Malaysia’s ringgit touched its lowest level in seven months on rising demand for the dollar on slowing Chinese growth and after Japan’s central bank boosted stimulus.

The yen touched a seven-year trough after the Bank of Japan announced last Friday that it plans to boost its monetary stimulus to 80 trillion yen ($709 billion) from 60 trillion yen-70 trillion yen. Chinese Purchasing Managers’ Index was less than expected as a similar measure for services also fell.

“The ringgit is declining on broad dollar strength after BOJ stimulus,” Gao Qi, a Singapore-based strategist at Royal Bank of Scotland Group Plc, told Bloomberg News. “China’s weaker-than-expected official PMI has caused market worries about slowing growth.”

The ringgit fell 0.9 percent, the most since Sept. 15, to trade at 3.3180 per dollar. It had earlier touched 3.3195, its lowest level since Feb. 14. The ringgit’s one-month implied volatility, which measures the expected swings in the exchange rate used to set prices to options, accelerated 35 basis points to 6.99 percent.

China’s official manufacturing PMI stood at 50.8 in October, trailing the average estimate of 51.2 in a Bloomberg poll. It is also weaker than 51.1 recorded in September. A measure exceeding 50 is an indicator of expansion.

The yield on Malaysia’s 4.181 percent sovereign bonds that mature in July 2024 plunged one basis point to steady at 3.83 percent, after dropping eight basis points last month.

The South Korea’s won posted its worst three-day losing streak in 16 months due to monetary policy divergence between the U.S. and Japan, which favored the dollar. The won dropped 0.4 percent to trade at 1,072.69 per dollar in Seoul close, resulting in a three-day decline of 2.4 percent. The won advanced to 9.46 versus the yen, the most since 2008, before easing to 9.52. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com