Ringgit falls on lower oil, China growth concern

Ringgit falls on lower oil, China growth concern

Customers count their ringgit notes outside a money changer at the central business district in Singapore on Aug 25, 2015. (Reuters photo)
Customers count their ringgit notes outside a money changer at the central business district in Singapore on Aug 25, 2015. (Reuters photo)

Malaysia’s ringgit fell for a fifth day on Tuesday, the longest run of losses in a month, as an overnight decline in energy prices and an economic slowdown in China damped demand for the oil-exporting nation’s assets.

Malaysia’s ringgit fell for a fifth day on Tuesday, the longest run of losses in a month, as an overnight decline in energy prices and an economic slowdown in China damped demand for the oil-exporting nation’s assets.

Brent crude slumped 4% on Monday, extending a decline that has contributed to a 19% depreciation in the ringgit this year in Asia’s worst performance. China, Malaysia’s biggest overseas market, reported on Tuesday its exports contracted for a second month in August, while imports shrank the most since May.

“There are uncertainties over China’s growth, declining oil prices, US Fed rate normalisation and global risk aversion,” said Leong Sook Mei, Southeast Asia head of global markets research at Bank of Tokyo-Mitsubishi UFJ in Singapore. “It’s a given that, in this kind of environment, Asian currencies will probably be very weak.”

The ringgit declined 0.2% to 4.3385 a dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. The currency, which has lost 4% in the past five days, earlier fell as much as 1% to 4.3730, the lowest since January 1998.

The ringgit’s drop was due to expectations of a depreciation in the yuan after China reported a decline in foreign-exchange reserves on Monday, according to Dushyant Padmanabhan, a strategist with Nomura Holdings Inc in Singapore.

A majority of more than 150 market participants surveyed by Moody’s Investors Service expect the ringgit and oil prices to stabilise, with 44% saying they expect the currency to trade between 4 and 4.50 a dollar, according to a statement from the rating company issued on Tuesday.

Global funds reduced holdings of Malaysian government bonds by 4.3% to 166.1 billion ringgit (US$38 billion) in August from July, the lowest level in five months, according to central bank data.

Sovereign bonds retreated, with the 10-year yield rising two basis points to 4.26%, according to prices from Bursa Malaysia.


Do you like the content of this article?
COMMENT

State of emergency to continue until Nov 30

The government is set to extend a state of emergency through November in order, it says, to prevent a resurgence in the novel coronavirus.

16:59

France honours beheaded teacher as judge questions suspects

PARIS: France will pay tribute Wednesday to a history teacher beheaded for showing cartoons of the Prophet Mohamed in a free speech lesson in a gruesome attack that has shocked the country and prompted a government crackdown on radical Islam.

16:45

Bail denied

Protest leaders Parit “Penguin" Chiwarak and Panusaya “Rung” Sithijirawattanakul refused bail by the Criminal Court, and taken to Bangkok Remand Prison.

16:15