Ringgit Falls to One-Week Low as Oil Drop Renews Finance Concern

Malaysia’s ringgit fell to a one-week low against the dollar as falling crude prices renewed concern that finances will worsen for Asia’s only major oil exporter.

The currency dropped 2.9 percent in March in the biggest decline in the region before a report Friday that may show exports contracted for a second month. Banks’ exposure to state investment company 1Malaysia Development Bhd. of around 5 billion ringgit ($1.4 billion) is “credit negative” and a loan facility provided by the government carries a risk that further support would undermine the fiscal consolidation trend that underlines the positive rating outlook, according to a statement from Moody’s Investors Service Monday.

“The decline in oil prices is the main drag on the ringgit,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The stronger dollar also didn’t help.”

The ringgit weakened 0.7 percent to 3.7110 versus the greenback in Kuala Lumpur, according to data compiled by Bloomberg. It earlier dropped to 3.7222 as the Bloomberg U.S. Dollar Spot Index climbed for a third day.

Brent crude prices fell 0.8 percent after Friday’s 4.7 percent drop. Foreign ministers from six world powers and Iran meet Monday in Switzerland, with their aim to forge an accord over sanctions and the nation’s nuclear activities. The oil producer, which is part of the Organization of Petroleum Exporting Countries, may increase shipments within months of a deal, U.S. and European officials said March 20.

1MDB Credit

Malaysian exports declined 1 percent in February from a year earlier, after contracting 0.6 percent in January, according to the median forecast of economists surveyed by Bloomberg. 1MDB has drawn criticism from lawmakers over its rising debt and was late in meeting a loan repayment last month before deciding to break up its business units. The government supplied a 950 million ringgit standby credit facility to the company in March.

Government bonds retreated. The 10-year yield rose one basis point, or 0.01 percentage point, to 3.9 percent, data compiled by Bloomberg show. One-month implied volatility in the ringgit, a measure of exchange-rate swings used in pricing options, rose 23 basis points to 10.35 percent. That’s the biggest gain since March 9.

Before it's here, it's on the Bloomberg Terminal.