Ringgit Falls Most in Three Weeks as Oil Prices Slump Overnight

  • Malaysia has 8.24 billion ringgit of debt maturing this week
  • Government bond auction draws fewest bids in a month

Malaysia’s ringgit fell the most in three weeks after Brent crude prices slumped overnight in New York, renewing concern about the impact on government finances for Asia’s only major oil exporter.

In a country that derives 22 percent of its income from oil-related sources, the halving in Brent crude prices from a 2014 peak has helped make the ringgit the region’s worst-performing currency this year. The losses have been exacerbated by a selloff in emerging-market assets amid slowing economic growth in China and a looming U.S. interest-rate increase. A report on Monday showed Malaysia’s factory output rose 3 percent in August from a year earlier, the slowest pace in 13 months.

The ringgit depreciated 1 percent to 4.1815 a dollar in Kuala Lumpur, according to data from local banks compiled by Bloomberg. It declined 0.2 percent on Monday when Brent crude fell 5.3 percent, the biggest drop since Sept. 1. The currency rallied 6.8 percent last week in the steepest gain since 1998.

“The ringgit has given up some of its recent gains, mainly on the back of a fall in oil prices overnight,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd. “The weaker industrial production data yesterday and an upcoming 8.2 billion ringgit bond maturity due Thursday could also be weighing a bit on the currency.”

Malaysia has 8.24 billion ringgit ($1.97 billion) of local-currency bonds maturing on Thursday. The government sold 3 billion ringgit of 2020 Islamic debt at a yield of 3.989 percent Tuesday, according to the central bank. Demand for the notes exceeded the amount on offer by 1.84 times, the lowest bid-to-cover ratio since Sept. 14.

Sovereign debt retreated, with the 10-year yield rising one basis point to 4.13 percent, prices from Bursa Malaysia show.

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