Malaysia’s ringgit fell to the lowest level in more than five years on concern that a protracted slump in crude prices will erode the oil-exporting nation’s revenue.
Brent crude sank to levels not seen since 2009 on speculation U.S. crude stockpiles will increase, exacerbating a global supply glut. Malaysia may review its 2015 budget to take into account the impact of falling energy costs, according to a report from the official Bernama news agency citing Prime Minister Najib Razak.
“Oil prices are again lower and some of that seems to be seeping through to the Malaysian ringgit,” said Divya Devesh, a foreign-exchange strategist at Standard Chartered Plc in Singapore. “Until we see a stabilization in crude oil prices, it’s really looking like difficult times for the ringgit.”
The currency depreciated 0.8 percent, the steepest fall since Dec. 1, to 3.5950 a dollar in Kuala Lumpur, according to data compiled by Bloomberg. It earlier reached 3.5975, the lowest since July 2009. The currency has fallen in six of the last eight days and lost 9.3 percent in the past three months, the worst performance in emerging Asia.
Nomura Holdings Inc. lowered its forecast for Malaysia’s 2015 economic growth to 4.7 percent from 5 percent as the nation is “unambiguously the big loser” in Asia due to the decline in oil prices, analysts including Euben Paracuelles wrote in a research note yesterday.
Malaysia’s gross domestic product will increase 5 percent to 6 percent in 2015, the Finance Ministry said in a report released last October. It estimated an expansion of 5.5 percent to 6 percent for 2014.
The government derives about 31 percent of its income from oil-related sources, official data show. The authorities aim to cut the fiscal deficit to 3 percent of GDP this year from 3.5 percent.
Malaysia’s benchmark 10-year sovereign bonds rose for a fourth day, with the yield falling eight basis points, or 0.08 percentage point, to 4.02 percent, data compiled by Bloomberg show.