Malaysia’s ringgit erased losses as Brent crude rallied back above $50 a barrel, easing pressure on government finances for Asia’s only major oil exporter.
The ringgit closed little changed at 3.8537 a dollar in Kuala Lumpur on Tuesday as a technical gauge suggested the U.S. currency was poised to reverse gains. The ringgit earlier fell to a new 16-year low and is the region’s worst performer in 2015 due to a combination of slumping oil, a probe into funds linked to state investment company 1Malaysia Development Bhd. that’s embroiled Prime Minister Najib Razak and the outlook for higher U.S. interest rates.
“There’s some pullback in the dollar, which could be the result of profit-taking after recent moves,” said Khoon Goh, a Singapore-based strategist at Australia & New Zealand Banking Group Ltd. “The weaker dollar and Brent recovering slightly above $50, provided some respite to the ringgit.”
The ringgit dropped as much as 0.5 percent on Tuesday to 3.8718, the lowest since September 1998 when it weakened to 3.9340, prices from local banks compiled by Bloomberg show. The dollar’s 14-day relative-strength index climbed above 70 for a second day, a level that signaled its rally may end.
Brent declined to $49.36 on Monday, the least since January, on prospects Iran will flood an already oversupplied market once sanctions are lifted.
A report on Wednesday may show Malaysia’s exports contracted in June, which would be the fifth monthly loss in 2015. Shipments decreased 2.2 percent from a year earlier, compared with a 6.7 percent decline in May, according to the median forecast of 18 economists surveyed by Bloomberg.
Ten-year government bonds halted a seven-day decline, with the yield falling one basis point to 4.07 percent, according to Bursa Malaysia prices.