Oil volatility hampers Malaysia's ringgit

Posted On: January 13, 2015

Malaysia's ringgit fell 0.8 percent on Tuesday to 3.5950 per U.S. dollar, marking its largest decline since Dec 1, Bloomberg reported. Earlier in the trading session, the currency depreciated to 3.5975, which was its lowest rate since July 2009.

The ringgit has depreciated in six of the last eight days and fallen 9.3 percent in the past three months, establishing it as the worst performer among Asian currencies during that time period. Government authorities hope to cut Malaysia's fiscal deficit from 3.5 percent of its GDP to 3 percent. The country currently draws 31 percent of its revenue through oil.

"Oil prices are again lower and some of that seems to be seeping through to the Malaysian ringgit," Divya Devesh, a foreign exchange strategist with Standard Chartered Plc in Singapore, told the news source. "Until we see a stabilization in crude oil prices, it's really looking like difficult times for the ringgit."

Gaurav Gard, a strategist with Citibank, told The Malay Mail Online that fiscal policy will be more challenging as oil prices continue to fall. He noted that while Malaysian crude oil prices have gained 12 percent since the middle of December, market sentiment of the country's assets will likely weaken.

Category: Industry News

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