Malaysia’s Ringgit Falls as Inflation Increases Rate-Rise Odds

Assalamualaikum.Today i would like to share with you about inflation in Malaysia. Malaysia’s ringgit fell as the fastest inflation in a year fueled speculation interest rates will be raised amid an economic slowdown. The introduction of a 6% GST in April by Prime Minister, Datuk Seri Najib Razak is putting a pressure on domestic prices, while import costs are rising after the ringgit slumped 15 percent this year in Asia’s worst performance. While boosting borrowing costs may be the “bitter pill Malaysia has to swallow to anchor important macro variables,” such a move could spur further capital outflows, especially if it “compromises an already fragile economy,” said Nizam Idris, Singapore-based head of foreign-exchange and fixed-income strategy at Macquarie Bank. “Hiking rates isn’t always positive to the currency, especially if it’s seen as a move to curb inflation while growth remains weak,” said Nizam. The ringgit dropped 0.4% to 4.1033 per dollar in Kuala Lumpur, after rising as much as 0.3% earlier, prices from local banks compiled by Bloomberg show. It reached 4.1340 on Monday, the lowest level since 1998. Government bond rose, with the 10-year yield falling two basis points to 4.28%, according to Bursa Malaysia prices. The economy expanded 4.9% in the three months through June, the slowest pace since the third quarter of 2013. The central bank has kept its benchmark policy rate at 3.25% for the past year, refraining from joining a global wave of easing to boost growth.