Malaysia's ringgit fell to a three-year low on concern global investors will repatriate funds after US$2.9 billion of sovereign debt matures tomorrow.

The local-currency bonds "may have a large proportion of foreign ownership" and capital outflows could cause the ringgit to underperform, Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong, wrote in a research note today. The yield on the government's benchmark three-year notes ended yesterday at the highest level since November 2008, according to data compiled by Bloomberg.

"One of the factors that is behind the depreciation in the ringgit has been the large redemption of Malaysian government securities," said Khoon Goh, a senior strategist at Australia and New Zealand Banking Group Ltd in Singapore. "That has got the market somewhat concerned that we're going to see some large outflows from the bond market."

The ringgit declined 0.3 per cent to 3.2365 per dollar as of 10.03am in Kuala Lumpur, according to data compiled by Bloomberg. It earlier touched 3.2379, the weakest level since July 1, 2010. It has fallen for five straight days, the longest losing streak since December 2012, and depreciated 2.4 per cent this month and 5.5 per cent in 2013.

Global funds held 33 per cent of Malaysian sovereign notes in May, the highest proportion among Southeast Asia's biggest economies, according to central bank and Finance Ministry data. This renders the nation's securities vulnerable to a global sell-off, Arjun Shetty, a rate strategist in Singapore at Deutsche Bank AG, said last week.

The government will auction RM4.5 billion of 2020 securities today, according to data published on the central bank's website.

The ringgit also weakened amid concern about a possible deterioration of Malaysia's current-account balance, Goh said. The surplus fell to RM8.7 billion in the January-March period from RM22.9 billion in the preceding three months, official data show. The nation may record an US$800 million current-account deficit in the second quarter, the first shortfall since 1997, according to a July 26 note from Bank of America Merrill Lynch.

One-month implied volatility in the ringgit, a measure of expected moves in exchange rates used to price options, rose 16 basis points, or 0.16 percentage point, to 8.30 per cent.

Government bonds declined. The yield on the 3.48 per cent notes due March 2023 climbed four basis points to 3.97 per cent, the highest since the notes were issued in March, according to data compiled by Bloomberg.-- Bloomberg