Kuala Lumpur: Malaysia's ringgit slumped to a four-month low as concern European nations will face rising costs to fund budget deficits eroded demand for emerging-market assets. Bonds slid.
The currency fell the most since August, completing a third weekly decline, as stocks tumbled worldwide. Heightened risk of sovereign debt default in Europe and rising jobless claims in the US are supporting demand for the perceived safety of the greenback, according to Sim Moh Siong, a currency strategist at the Bank of Singapore.
"It's a flight to quality with the sell-off in equities and risky assets," said Sim. "It's broadening out to developed and emerging markets and the longer the problem lingers, the greater the risk of contagion becomes."
The ringgit weakened 0.5 per cent to 3.4385 per dollar as of 11.51am in Kuala Lumpur, according to data compiled by Bloomberg, taking last week's loss to 0.8 per cent.
The currency earlier reached 3.4540, the weakest level since October 6.
The MSCI Emerging Markets Index of stocks fell 2 per cent, adding to a 2.7 per cent slide on Saturday.
