A surprise rebound in Malaysia’s exports failed to revive the ringgit, which fell to a 17-year low on prospects for a September increase in U.S. interest rates.
The ringgit is Asia’s worst performer this year, having been battered by sliding commodities prices and a political scandal involving Prime Minister Najib Razak. Most regional currencies weakened on Wednesday after comments by a Federal Reserve official fueled speculation U.S. borrowing costs will be raised next month. Malaysia’s exports rose 5 percent from a year earlier in June, the most in 12 months.
“The ringgit isn’t reacting to the better export numbers because the watch is not on trade,” said Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur. “The watch is on foreign-exchange reserves, which are expected to fall further,” he said, referring to this year’s 13 percent drop in holdings to $100.5 billion in mid-July.
The currency fell 0.6 percent at 3.8775 a dollar in Kuala Lumpur, prices from local banks compiled by Bloomberg show. It declined to 3.8787 before the trade numbers, the lowest since September 1998 when it reached 3.9340.
The ringgit, which has lost 9.8 percent in 2015, extended this week’s losses in early trading after Fed Bank of Atlanta chief Dennis Lockhart said in a Wall Street Journal report that he would only endorse putting off a rate increase next month should there be a significant deterioration in U.S. data.
Malaysia’s overseas shipments beat the median estimate in a Bloomberg survey for a 2.2 percent drop. The June trade surplus came in at 7.98 billion ringgit ($2.06 billion), above the 5.5 billion ringgit predicted and the highest in five months.
Ten-year government bonds were little changed with the yield at 4.07 percent, according to Bursa Malaysia prices. The five-year yield climbed five basis points to 3.69 percent. the highest since June 29.