Ringgit Falls the Most in Three Weeks as Violence in Iraq Escalates

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Ringgit Falls the Most in Three Weeks as Violence in Iraq EscalatesThe Malaysian ringgit plunged the steepest in three weeks after the ongoing violence in Iraq lowered demand for assets from emerging economies.

The ringgit plunged 0.4 percent, the most since June 2, to trade at 3.2270 per dollar by 1:09 p.m. local time.  The currency closed yesterday at 3.2137 per dollar. Other Asian currencies also fell, while the MSCI Asia Pacific gauge of equities plunged over reports that Sunni-linked militants, the Islamic State in Iraq and the Levant, have overrun large portions of the country.

“There’s definitely some risk aversion creeping back into markets,” Jonathan Cavenagh, a strategist at Westpac Banking Corp in Singapore told Bloomberg. “There were reports of Syria bombing parts of Iraq.”

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The Brent crude surged 0.7 percent to trade at $106.73 per barrel after earlier rising to the highest level in nine months of $107.73 last Friday. The Iraqi violence has led to fears that oil supplies would be disrupted in OPEC’s second-biggest oil producer.

The ringgit’s one-month implied volatility, which tracks the expected swings in the exchange rate used to assign prices to options, plunged 7 basis points to 4.86 percent.  The yield on 4.181 percent bonds that mature in July 2024 remained slightly unchanged at 4.06 percent. The yield has advanced 0.02 percentage point, or two basis points, so far in June.

Separate report showed that Malaysia’s jobless rate in April fell to 2.9 percent, compared to 3.0 percent in March and 3.0 percent in April 2013, reported the Department of Statistics. The number of jobless persons in April fell to 407,200 from 415,700 in March. In April last year, the figure stood at 403,600 persons. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com