Malaysia’s Ringgit Drops to 3-Year Low as Growth, Stocks Falter
By David Yong
March 2 (Bloomberg) — Malaysia’s ringgit fell, extending a two-month slide, on concern the risk of recession will deter investors from buying local assets.
The currency declined to the weakest in more than three years after a central bank report last week showed growth in Southeast Asia’s third-largest economy almost stalled last quarter amid a collapse in exports. Deputy Prime Minister Najib Razak will unveil a second fiscal stimulus package on March 10 to supplement a $1.9 billion spending plan announced in November.
“A prolonged recession in major economies will increase the downside risks to the local economy and the ringgit,” said Wan Murezani Mohamad, a senior analyst at Malaysian Rating Corp. in Kuala Lumpur. “Risk aversion will continue because investors haven’t regained their confidence and fiscal stimulus programs haven’t product much impact yet.”
The ringgit declined 0.6 percent to 3.7240 per U.S. dollar as of 9:13 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency reached 3.7270, the weakest since February 2006. It declined 2.7 percent last month.
The MSCI Asia Pacific Index of regional equities fell to the lowest since November. The Kuala Lumpur Composite Index of stocks dropped 0.2 percent.
Gross domestic product rose 0.1 percent in the final three months of 2008, Bank Negara Malaysia said in a statement after the market closed on Feb. 27. The central bank on Feb. 24 cut its overnight rate to record-low 2 percent from 2.5 percent, saying the economy may contract for the first time since the Asian crisis in 1998.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net
Last Updated: March 1, 2009 20:35 EST