KUALA LUMPUR (Bloomberg) - Malaysia's ringgit extended a three-month loss to almost 10 per cent, the worst in Asia, after the government's increase to the fiscal deficit target prompted Fitch Ratings to warn of a credit-rating downgrade.

The currency was already trading at its lowest since 2009 before Prime Minister Najib Razak on Tuesday raised the 2015 deficit projection to 3.2 per cent of gross domestic product from 3 per cent amid a slump in crude that's eroding state revenue for Asia's only major oil exporter. Fitch said its negative outlook on the sovereign indicates it's "more likely than not" to cut the rating given the nation's dependence on commodities.

"The market is a bit concerned that we have a higher deficit target," said Choong Yin Pheng, senior manager for bond and economic research at Hong Leong Bank Bhd. in Kuala Lumpur. Fitch's statement "definitely has a bearing on the market," she said.

The ringgit weakened 0.5 per cent to 3.6258 to the US dollar as of 10:07 a.m. in Kuala Lumpur and fell to 3.6277, the lowest level since April 2009, data compiled by Bloomberg show.

Southeast Asia's third-largest economy will expand 4.5 per cent to 5.5 per cent this year, compared with an earlier projection of as much as 6 percent, Najib said in a speech in the administrative capital of Putrajaya on Tuesday. The nation isn't in crisis, he said.

Australia & New Zealand Banking Group lowered its year-end forecast for the ringgit to 3.60 from 3.45, citing further downward revisions to its oil price target, according to a research note published Jan. 21. Fitch rates Malaysia A-, the fourth-lowest investment grade and three levels above Indonesia.

A 57 per cent drop in Brent crude since June prompted Najib to cut the oil price assumption target for the 2015 budget to US$55 a barrel from US$100. It last traded at US$48.32.