Ringgit Records Weekly Decline as Fitch Rating Deadline Looms

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Malaysia’s ringgit fell this week amid speculation the nation is facing its first credit-rating downgrade since 1998.

Fitch Ratings will review Malaysia’s A- ranking before the end of the month, Andrew Colquhoun, head of Asia Pacific sovereign ratings, said June 23. The country is “more than 50 percent likely” to be downgraded because of the worsening trade balance and concern about the ability of a state investment company to pay its debts, he said in March. Exports fell in May, which would be the fourth monthly drop this year, according to a Bloomberg survey of economists.

“We continue to keep an eye on Fitch’s review of the country’s sovereign rating,” said Christopher Wong, a Singapore-based senior currency analyst at Malayan Banking Bhd. “There are the same old concerns of rating downgrade fears as we head closer to D-Day.”

The ringgit weakened 0.7 percent in five days and 0.3 percent on Friday to 3.7680 a dollar in Kuala Lumpur, according to data compiled by Bloomberg. The currency has dropped 2.7 percent this month, Asia’s biggest loss, and reached a nine-year low of 3.7743 on June 8.

Overseas shipments fell 9.5 percent in May from a year earlier, after declining 8.8 percent the previous month, according to the median estimate in the Bloomberg survey before data due July 3.

Sovereign bonds were little changed, keeping the three-year yield near the lowest level since 2013. The rate on the October 2017 notes fell nine basis points this week, data compiled by Bloomberg show.