The Malaysia’s ringgit dropped to its weakest level in over five years on fears that a prolonged decline in crude oil prices could affect its revenue.
The Brent crude touched levels last seen in 2009 amid speculation that U.S. crude stockpiles are increasing, worsening the international supply glut. The official Bernama news agency reported that Malaysia may revise its budget for this year in order to factor in the declining oil prices, quoting Prime Minister Najib Razak.
The ringgit dropped 0.8 percent, the most since Dec. 1, to trade at 3.5950 per dollar in Kuala Lumpur. The currency had earlier touched 3.5975, its weakest level since July 2009. The ringgit has plunged 9.3 percent over the last three months, making it the worst performer out of emerging Asian nations.
“Oil prices are again lower and some of that seems to be seeping through to the Malaysian ringgit,” Divya Devesh, a Singapore-based foreign-exchange strategist at Standard Chartered Plc, told Bloomberg News. “Until we see stabilization in crude oil prices, it’s really looking like difficult times for the ringgit.”
Malaysia relies on oil to finance about 31 percent of its revenue, according to official data. Policy makers plan to lower the fiscal deficit to 3 percent of the gross domestic product, down from 3.5 percent. The nation’s target 10-year sovereign bonds advanced the fourth day as yield plunged eight basis points to 4.02 percent.
Nomura Holdings slashed its estimate for Malaysia’s economic growth in 2015 to 4.7 percent, down from 5 percent, citing the fact that the country could be hit hard by falling oil prices. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at email@example.com