Malaysia’s Ringgit Drops as Recession Damps Exports; Bonds Fall

By David Yong

March 30 (Bloomberg) -- Malaysia’s ringgit dropped, ending a two-day gain, before a government report this week that may show exports fell for a fifth month in February. Bonds declined.

The currency slid from a six-week high versus the dollar after a report on March 27 showed U.S. consumer confidence in the world’s biggest economy was near a three-decade low and Japan announced a fifth straight decrease in industrial production. Malaysia’s overseas sales tumbled 25 percent from a year earlier, according to the median estimate of economists surveyed by Bloomberg News before the April 3 trade data.

“Economic data will continue to show a downtrend over the next two to three months,” said Lam Chee Mun, manager in Kuala Lumpur at TA Investment Management Bhd. with $200 million of assets. “People will find that an easy excuse to lock up recent gains” in stocks and currencies, he said.

The ringgit fell 1 percent to a one-week low of 3.6525 per dollar as of 4:54 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency reached 3.6095 on March 27, the strongest since Feb. 16. It gained 1.4 percent this month, paring the quarter’s decline to 5.5 percent.

All of Asia’s 10 most-traded currencies excluding the yen slid against the greenback today. The MSCI Asia Pacific Index of regional shares snapped a five-day rally. The U.S. said some banks will need large amounts of government aid and asked automakers to overhaul their recovery plans.

Bond Auction

Three-year government bonds declined for a third day after investors sought higher yields to buy the notes at an auction today.

The yield on the 2.509 percent bond due in August 2012 increased six basis points to 2.90 percent, according to Bursa Malaysia Bhd. The price fell 0.19 to 98.74. A basis point is 0.01 percentage point.

The government today sold an additional 4.5 billion ringgit ($1.2 billion) of the 2012 notes at an average yield of 2.849 percent, according to results published by Bank Negara Malaysia on its Web site. Investors submitted bids for 1.5 times the amount of debt on offer, according to the central bank, versus 2.34 times at the previous sale on Feb. 26.

“The yield level for each auction in future may be on the high side, reflecting concerns about supply,” said Tan Chee Wee, head of fixed-income research at Maybank Investment Bank Bhd. in Kuala Lumpur. “People will tend to try and get them at cheaper price post-auction.”

Today’s auction increased total proceeds from local debt sales to 24.5 billion ringgit, the most in any quarter since at least 1999, according to central bank data. The government will sell new Shariah-compliant three-year Islamic notes next month, according to its sale calendar.

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