Malaysian Ringgit at Six-Month Low as Anwar Charged in Sex Case

By David Yong

Aug. 7 (Bloomberg) -- Malaysia's ringgit fell to the lowest in more than six months on concern that investors will avoid local assets as political tensions escalate.

The currency dropped for a fifth day as opposition leader Anwar Ibrahim appeared in court charged with having homosexual relations. He pleaded not guilty and a trial was set for Sept. 10. Anwar earlier denied the accusation, saying it's a ploy to derail his political comeback. The Kuala Lumpur Composite Index of shares fell 1.2 percent and bonds declined.

``The main thing investors worry about is political uncertainty and the market could react negatively,'' said Nikhilesh Bhattacharyya, an economist at Moody's Economy.com in Sydney. ``It doesn't look pretty, looking from outside.''

The ringgit fell 0.2 percent to 3.2840 against the dollar as of 10:35 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. It reached 3.2855, the lowest since Jan. 24.

Anwar is preparing to contest a parliamentary by-election scheduled for Aug. 26.

The charge against Anwar should be dropped because it was politically motivated to prevent a challenge to the government's rule, New York-based Human Rights Watch said in an e-mail statement and posted on its Web site today.

Prime Minister Abdullah Ahmad Badawi faced calls to step down after the ruling National Front coalition lost its two- thirds majority in parliament in a March election. The ringgit plunged the most in nine months and stocks had the biggest loss in a decade after the poll.

Bonds Drop

JPMorgan Chase & Co. and Standard Chartered Plc are among banks that have trimmed their ringgit forecasts for this year, citing political risks from Malaysia's leadership strife.

Ten-year government bonds fell for a third day, driving yields to the highest in a week.

The yield on the 4.24 percent note due in February 2018 rose 3 basis points to 4.77 percent, according to Bursa Malaysia Bhd.'s electronic bond exchange. The price declined 0.20, or 2 ringgit per 1,000 ringgit face amount, to 96. A basis point is 0.01 percentage point.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.