Ringgit Sinks as Crude’s Tumble Bodes Ill for Malaysia Financesby
The ringgit led a decline in Asian currencies as slumping oil prices dim the prospects for Malaysia’s export earnings.
Brent crude sank 0.8 percent to close at its lowest level in four months on Monday, and U.S. oil slid into a bear market amid renewed concern there is a global supply glut. While prices rebounded on Tuesday, Brent is still down about 19 percent from this year’s high in June. Malaysia loses 450 million ringgit ($112 million) in annual income for every $1 drop in oil and the nation derives about a fifth of its revenue from energy-related sources.
“The wider story is the oil price slippage for the past few weeks,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. “In Malaysia’s case, oil has the most pronounced effect, so that’s keeping the ringgit in check.”
The ringgit weakened as much as 1 percent before ending 0.3 percent lower at 4.0345 per dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It has lost 0.9 percent in the past one month, the worst performance in Asia.
Ten-year government bonds fell, pushing the yield up three basis points to 3.62 percent, according to prices from Bursa Malaysia. The five-year yield also climbed three basis points to 3.24 percent.