Malaysia’s ringgit snapped a six-week gain as a drop in crude prices raised concern government finances in the oil-exporting nation will deteriorate.
Brent crude tumbled by the most in a month on Thursday and was had its first weekly decline in six. U.S. jobs data due Friday may give clues on the strength of the nation’s economic recovery and the timing of the Federal Reserve’s first interest-rate increase since 2006.
The ringgit dropped 0.7 percent this week and 0.1 percent Friday to 3.5985 a dollar in Kuala Lumpur, data compiled by Bloomberg show. It touched 3.6168 earlier, the weakest since April 23.
“The oil price decline is the main reason for the ringgit weakness,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “There’s some positioning play before the U.S. non-farm payroll data.”
Fed Chair Janet Yellen said Wednesday that “long-term interest rates are at very low levels” and Treasury yields “could see a sharp jump” when policy is tightened. The timing of rate hikes by the Fed will be the key driver for the ringgit as domestic factors affecting the currency since last year have been largely factored in, Australia & New Zealand Banking Group Ltd. analysts Danny Suwanapruti, Khoon Goh, and Weiwen Ng wrote in a note Friday.
Bank Negara Malaysia held its policy rate at 3.25 percent on Thursday, as predicted by 21 of 22 economists surveyed by Bloomberg. Exports unexpectedly rose in March from a year earlier, according to a report released the same day.
Malaysian sovereign bonds fell, pushing the yield on the 10-year notes up five basis points, or 0.05 percentage point, this week to 3.91 percent, data compiled by Bloomberg show. The yield rose one basis point on Friday.