Ringgit falls to 3-month low as China slowdown spurs sell-off across markets

Malaysian ringgit notes are seen among other currency notes in this photo illustration.
Malaysian ringgit notes are seen among other currency notes in this photo illustration.PHOTO: REUTERS

KUALA LUMPUR (BLOOMBERG) - Malaysia's ringgit fell to a three-month low on Thursday (Jan 7) as concern about the extent of China's slowdown triggered a sell-off in emerging-market assets.

The biggest slump in Brent crude since September to the lowest level in more than 11 years did not help the ringgit either as it damps the outlook for Asia's only major net oil exporter. The offshore yuan dropped to a five-year low in Hong Kong, fuelling speculation the central bank will favour depreciation to revive its economy. That drove a measure of developing-nation currencies to the weakest since 1993 and sent global stocks down.

"The unstable China economy and markets are the main drivers for risk-off," said Mr Masashi Murata, vice-president at Brown Brothers Harriman & Co. in Tokyo. "Lower oil prices lead to a weak ringgit too."

The ringgit declined 0.8 per cent to 4.4270 per US dollar as of 9:26 am in Kuala Lumpur and earlier fell to 4.4285, the lowest since Oct 2, according to prices from local banks compiled by Bloomberg.

It also weakened against the Singapore dollar, with one Singdollar worth 3.0720 ringgit as at 9.45am, from 3.0630 on Wednesday.

The ringgit has weakened 2.8 per cent this year, after rounding off its worst annual loss since 1997.

Malaysia reports November export data on Thursday and shipments likely rose 12 per cent from a year earlier, according to the median estimate in a Bloomberg survey. That follows a 16.7 per cent advance in October. The trade surplus is forecast to narrow to RM12 billion (S$3.9 billion) from RM12.16 billion. Foreign-exchange reserve figures also come out later on Thursday.