Ringgit falls to five-week low as China output misses estimates

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(Sept 15): The ringgit declined to a five-week low as slowing Chinese factory output stoked concern about growth in Malaysia’s second-biggest overseas market.

China’s industrial production rose 6.9 percent in August, figures showed Sept. 13. That was the weakest since 2008 and below the median estimate of economists in a Bloomberg survey for an 8.8 percent gain. The Federal Reserve, which is in the midst of cutting bond purchases and has indicated interest rates may rise next year, starts its two-day policy meeting tomorrow.

The ringgit’s drop “is probably on the back of the weaker Chinese data,” said Michael Every, the head of Asia Pacific financial-markets research at Rabobank International in Hong Kong.“That’s on top of the general run-up to the nervousness that we’ve got flying around in the market ahead of the Fed.”

The ringgit depreciated 0.4 percent to 3.2085 per dollar as of 10:23 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. It earlier reached 3.2090, the weakest since Aug. 8. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose six basis points, or 0.06 percentage point, to 7.06 percent.

Malaysian export growth is already showing signs of slowing. Shipments increased 0.6 percent in July from a year earlier, the least in 13 months, according to a Sept. 5 report. That was below the 5.3 percent median estimate in a Bloomberg survey,

Borrowers from emerging markets may need to refinance about $90 billion next year and as much as $130 billion by 2017-2018, which could be challenging if the dollar strengthens and domestic economies slow, according to the Bank for International Settlements’ Quarterly Review issued yesterday.

The yield on Malaysia’s 4.181 percent sovereign bonds due July 2024 climbed one basis point to 4.01 percent, data compiled by Bloomberg show. The rate has advanced eight basis points this month.