Ringgit Leads Asia Losses This Week as Crude Oil Resumes Decline

Malaysia’s ringgit fell for a third week as oil prices slumped before U.S. data that may provide further clues on when the Federal Reserve will tighten policy.

The currency led declines in Asia as a 5.9 percent drop in Brent crude this week weighed on the outlook for Malaysia, which derives 22 percent of state revenue from energy-related sources. The country’s exports contracted more than economists forecast in April and the trade surplus narrowed, a government report showed Friday.

The ringgit depreciated 1.4 percent from May 29 and 0.6 percent on Friday to 3.7190 a dollar in Kuala Lumpur, data compiled by Bloomberg show. It fell to a 10-week low of 3.7243 today and has dropped 4.2 percent in three weeks.

“Malaysia is the most exposed to lower commodity prices, in particular oil,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “With the Greece negotiations getting pushed back, that should see payrolls as the key driver of markets.”

Exports dropped 8.8 percent in April from a year earlier, missing the median estimate of economists for a 5.5 percent decline, official data showed. The trade surplus narrowed to 6.89 billion ringgit ($1.9 billion) from 7.82 billion ringgit.

Employers in the U.S. probably added more jobs in May than April, a Bloomberg survey shows before data due Friday, which would support the case for the Fed to move closer to raising interest rates. Greece told the International Monetary Fund on Thursday it would delay a debt payment of about $339 million due Friday, submitting a request to bundle payments due this month into one lump sum.

Malaysian sovereign bonds fell, pushing the five-year yield up four basis points this week to 3.64 percent, data compiled by Bloomberg show.

The government sold 3 billion ringgit of notes maturing in 2025 at an average yield of 4.037 percent Friday, central bank data show. Demand for the securities exceeded the amount on offer by 1.67 times, the lowest bid-to-cover ratio this year, according to data compiled by Bloomberg.

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