Ringgit little changed, inflation may ease

Malaysia’s ringgit was little changed, after sliding in each of the last
two weeks, before a government report in two days time that economists
predict will show inflation slowed.

The ringgit reached a
two-month low of 3.2045 per dollar on Dec 15 as concern Europe’s debt
crisis will worsen sapped demand for emerging-market assets. Fitch
Ratings lowered France’s rating outlook on Dec 16 and put the grades of
nations including Spain and Italy on review for a downgrade. Belgium’s
credit rating was cut the same day by Moody’s Investors Service.
Malaysia’s consumer prices rose 3.3 per cent from a year earlier in
November after gaining 3.4 per cent in October, according to the median
estimate of economists in a Bloomberg News survey.

“Market
players are reluctant to take heavy positions ahead of the inflation
data,” said Calbert Loh, the head of treasury at Bangkok Bank Bhd in
Kuala Lumpur. “The Malaysian currency will likely trade in a tight range
as Fitch Ratings’ downgrade of France is discounted and won’t have a
major impact.”

The ringgit traded at 3.1780 per dollar as of 9:24
a.m. in Kuala Lumpur, from 3.1778 at the end of last week, according to
data compiled by Bloomberg. The currency fell 0.8 per cent last week,
extending its loss for the year to 3.6 per cent.





Malaysia’s five-year bonds declined last week. The yield on the 4.262
per cent notes due September 2016 rose one basis point, or 0.01
percentage point, to 3.26 per cent, according to Bursa Malaysia.

The
central bank will keep its benchmark overnight rate unchanged at 3 per
cent in the first quarter, according to nine of 11 economists surveyed
by Bloomberg. The other forecasts were for cuts of 25 basis points and
50 basis points. -- Bloomberg