Malaysia ringgit sinks to 16-year low on PM graft allegations

Malaysia's ringgit tumbled to the weakest level since a dollar peg was scrapped in 2005 as the heightened risk that Greece will exit the euro damped demand for emerging-market assets.
Malaysia's ringgit tumbled to the weakest level since a dollar peg was scrapped in 2005 as the heightened risk that Greece will exit the euro damped demand for emerging-market assets.PHOTO: AFP

SINGAPORE (REUTERS, BLOOMBERG) - Malaysia's ringgit hit a 16-year low on Monday as political tensions mounted over a report that linked Prime Minister Najib Razak to probes into alleged corruption involving state fund 1MDB.

The ringgit fell as much as 0.8 per cent to 3.8070 per US dollar, its weakest since May 1999.

Two of Malaysia's main opposition parties on Sunday demanded an emergency sitting of parliament to discuss Mr Najib's future.

A Wall Street Journal (WSJ) report published on Friday said investigators had traced nearly US$700 million (S$945 million) to bank accounts they believed belonged to the prime minister.

Mr Najib has denied taking any money from the debt-laden state fund or any other entity for personal gain.

Malaysia's currency is Asia's worst-performing exchange rate this year as the political debate surrounding 1MDB that has engulfed Mr Najib compounded its woes. A 48 per cent drop in Brent crude prices from last year's peak prompted Fitch Ratings to warn in March that the net oil exporter faced the risk of a downgrade because of deteriorating finances.

Fitch refrained from doing just that on June 30 following a review and instead raised the outlook on the A- rating, the fourth-lowest investment grade, to stable from negative, resulting in a short-lived rally in the ringgit.