SINGAPORE, Oct 28 — The Malaysian ringgit raced to its highest in more than four months today as government steps to tackle a worrying fiscal deficit attracted capital inflows, while the Indonesian rupiah slid on month-end corporate dollar demand.

The ringgit rose as much as 1.1 per cent to 3.1220 per dollar, its strongest since June 17.

On Friday, the government announced a new consumption tax at a higher-than-expected 6 per cent, abolished subsidies on sugar, and hiked property taxes to dent a surge in home prices.

The Malaysian currency, however, gave up a part of its initial rises as local investors took profits, and ended the day up 0.7 per cent.

Fitch Ratings, which cut the Malaysia’s sovereign rating outlook in July, said the budget signalled reforms but stressed that implementation was key.

The rupiah fell as dollar bids from domestic companies prompted investors to book profits from the last week’s best performing emerging Asian currency.

Meanwhile, most emerging Asian currencies barely budged as investors awaited the US Federal Reserve’s policy meeting tomorrow and Wednesday. — Reuters