The Malaysian Ringgit Sink to a 12 year Low on Investors Worry of a Fed Interest Rate Hike - Alldamoney

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The Malaysian Ringgit Sink to a 12 year Low on Investors Worry of a Fed Interest Rate Hike

Kuala Lumpur  Friday (Nov 11) – The Malaysia ringgit sank to its lowest rate since 12 years as investors dumped government bonds in offshore markets while the spot rate barely moved because of the central bank  tight grip on the onshore market. 

Emerging Asian bonds and currencies lost ground based on uncertainty

Based on data from Thomson Reuters the ringgit's one-month non-deliverable forwards (NDFs) lost 3.7 percent from the previous close to 4.5395 per dollar. 
Meanwhile, the ringgit spot rate barely moved at 4.2725 per dollar trading on low volume resulting in the dollar/ringgit NDFs premium going over the dollar/ringgit rising  to 0.2695 the widest since April 2008. 
Government bond prices fell with the 10-year yield at 3.821 percent, rising 0.038 percentage point to its highest since June 28. The latest increase in the yield came on top of Thursday's 0.121 percentage point rise 
Moreover, investors fear of a higher US interest rates expected from Donald Trump’s presidency which they assume would spark capital outflows from the region. Pushing Emerging Asian bonds and currencies to the  ground. 
Malaysia's central bank governor advised banks in the country to take "temporary measures to calm the market”.  
"The situation now is aa a result of speculative positioning... The central bank has the responsibility to step in...," he said at a news conference held to announce economic growth and current account data. 
Hfurther stated that authorities intend to allow spot trades linked to transactions in bonds on a case by case basis.  
Also, the central bank told banks not to quote spot ringgit "so wide", which dried up liquidity in onshore currency market according to a senior Malaysian currency trader said.type/right

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