KUALA LUMPUR, Sept 13 — Malaysia’s ringgit fell, reversing an earlier gain to a one-month high, on speculation investors are buying the US dollar before a Federal Reserve meeting where policy makers may announce a reduction in stimulus.

The Fed Open Market Committee meets September 17-18 to discuss its US$85 billion (RM278.6 billion) monthly debt-purchase program after a report this month showed US manufacturing climbed to a two-year high in August. Malaysian inflation accelerated to a 16-month high of 2 per cent in July, while the central bank lowered its 2013 economic growth forecast last month to 4.5 per cent to 5 per cent from as much as 6 per cent. The government increased fuel prices on September 3.

“Given the increased pace of economic recovery in the US, people could be buying the dollar in anticipation of Fed tapering in the upcoming FOMC meeting,” said Suresh Kumar Ramanathan, a regional currency strategist at CIMB Investment Bank in Kuala Lumpur. “The ringgit came under pressure because of concerns over rising inflation following the recent fuel subsidy cut and lower growth rate.”

The ringgit declined 0.4 percent to 3.2773 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. The currency rose as much as 0.3 per cent to a one-month high of 3.2527 earlier. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 19 basis points, or 0.19 percentage point, to 9.40 per cent.

Government bonds were little changed. The yield on Malaysia’s 3.48 per cent sovereign notes due March 2023 held at 3.85 per cent, according to data compiled by Bloomberg. — Bloomberg