The Malaysian ringgit reversed its earlier gains that saw it hit a four-month peak over concerns that its exports will be negatively affected by the Chinese economic slowdown.
The ringgit was trading 0.1 percent lower at 3.2309 by 11:43 a.m. in Kuala Lumpur. The currency had earlier rose to 3.2150, the highest level since December 11, after a Federal Reserve report indicated that interest rate hikes won’t come anytime soon.
China, which is Malaysia’s third-largest export market, announced on Thursday that its exports fell 6.6 percent last month from a year ago. This was less than market expectations of a 4.8 percent growth. Official data released today showed that Malaysia’s factory output rose its strongest in seven months in February.
“China’s data make for a very uncomfortable feet-shuffling and wringing of hands,” Vishnu Varathan, an economist at Mizuho Bank Ltd in Singapore, told Bloomberg. “It’s premature to get alarmist about it. Such numbers may actually not only accelerate but also upsize the stimulus that China may be planning.”
Chinese imports plunged 11.3 percent in March from a year ago, lagging the average estimate of a 3.9 percent growth in a Bloomberg poll of economists. Malaysia’s factory production surged 6.7 percent in February from the same period a year ago, surpassing economists’ estimate of a gain of 6.2 percent. A separate Malaysia’s data released on April 4 indicated that exports surged 12.3 percent in February
The one-month implied volatility of the ringgit, which measures expected shifts in the exchange rate used to assign prices to options rose 0.14 percentage points, or 14 basis points, to 6.50 percent.
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