Overseas investors appear unfazed by a slump in the ringgit, as government bond holdings rose to a record.
Global funds raised ownership of Malaysian sovereign notes by 4.5 percent in June to 176.6 billion ringgit ($46.4 billion) from May, a fourth monthly increase, central bank data show. While the U.S. is edging closer to boosting interest rates, 10- year bonds in the Southeast Asian nation still offer a yield of 4.09 percent, compared with 2.20 percent for Treasuries.
The ringgit dropped beyond 3.8 per dollar this week for the first time since a peg was scrapped in 2005, after falling a combined 5.7 percent through June and May.
Malaysia has been more exposed to emerging-market currency losses this year as controversy over state investment company 1Malaysia Development Bhd. that has embroiled Prime Minister Najib Razak exacerbated its oil-related losses.
“The yield disparity with U.S. dollar yields is still there,” said Nik Mukharriz Muhammad, a Kuala Lumpur-based fixed-income analyst at CIMB Investment Bank Bhd.
“Uncertainty is something that investors wouldn’t like but they are more focused on the fundamentals, which are still intact.”
Foreign holdings of Malaysian government and corporate debt climbed 1.7 percent to 211.9 billion ringgit in June from the previous month. The three-year note yield fell 13 basis points last month to 3.19 percent, the biggest decline of 2015, prices from Bursa Malaysia show. It has since increased to 3.23 percent.
UBS Group AG predicts the ringgit will end the year at 3.75 a dollar, with the market having priced in the worst of the weakness, according to a July 8 research note.
That’s more optimistic than Barclays Plc and Credit Suisse Group AG, which forecast the currency will drop to 3.88 and 3.83, respectively. It has lost 7.9 percent this year and traded at 3.7980 as of 10:20 a.m. in Kuala Lumpur on Thursday.
One-year interest-rate swaps were little changed at 3.71 percent before today’s central bank policy meeting. The monetary authority will keep the benchmark rate at 3.25 percent, according to all 21 economists in a Bloomberg survey ahead of the 6 p.m. decision.
Bloomberg
Thu Jul 09 2015
The ringgit dropped beyond 3.8 per dollar this week for the first time since a peg was scrapped in 2005. - File pic
Zayn Malik postpones US tour dates after One Direction bandmate Liam Payne's death
Payne, 31, died on Wednesday after falling from a third-floor hotel room balcony in Buenos Aires, shocking fans of the boy band.
Why voters in a handful of swing states will decide the US presidential election
The contest will almost certainly be decided by just tens of thousands of voters a tiny fraction of the populace in a handful of states.
INSIGHT - Sudan's war risks 'lost generation' of children
A devastating crisis is unfolding in Sudan, where the most vulnerable members of society children are bearing the brunt of the violence.
Former special forces commander Prabowo to take up Indonesian presidency
Indonesia's Prabowo Subianto will take over as president of the world's third-largest democracy after sweeping the country's election with policies like free meals for school children
Who is Prabowo Subianto, incoming president of Indonesia?
A wealthy ex-general with ties to Indonesia's popular outgoing president and its dictatorial past, looks set to be its next leader.
Trump says he would impose tariffs on China if China went into Taiwan
Republican presidential candidate Donald Trump said he would impose additional tariffs on China if China were to "go into Taiwan,"
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.