Ringgit Sinks as Brent’s Drop Dims Outlook for Malaysia Financesby
Oil-related sources contribute a fifth of nation’s revenues
Ringgit is Asia’s worst-performing currency this month
Malaysia’s ringgit sank as a slump in oil prices cast a cloud over the finances of Asia’s only major net oil exporter.
Brent crude slid to a three-month low at less than $42 a barrel and was set for its biggest weekly decline since January, weighing on the outlook for the Southeast Asian economy that derives about a fifth of its revenue from energy-related sources. Probes into state fund 1Malaysia Development Bhd. are also undercutting the ringgit.
“Sliding oil prices and the hovering 1MDB controversy” are having an impact, said Gao Qi, a strategist at Scotiabank in Singapore.
The ringgit retreated 0.5 percent to close at 4.0708 per dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It lost 1 percent in July, the worst performance in Asia.
Last week, authorities in Singapore and the U.S. moved to seize assets linked to alleged fraud involving 1MDB, the latest chapter in the troubled company’s woes, which have implicated Prime Minister Najib Razak. The Malaysian government said it will cooperate with lawful investigations of local companies or its citizens.
The 10-year government bond yield rose two basis points to 3.63 percent while the five-year yield declined one basis point to 3.22 percent, according to prices from Bursa Malaysia.