Ringgit adds to declines as new 1MDB probes compound losses

The ringgit added to Monday's decline after the New York Times reported the US Justice Department has started an investigation into allegations of corruption associated with Malaysian Prime Minister Najib Razak and people close to him, spurring a surge in debt insurance costs.

 

The NYT said the probe is focusing on US properties that were purchased by shell companies belonging to Mr Najib's stepson and money in the premier's personal bank account. A report days earlier from the Wall Street Journal said the US Federal Bureau of Investigation began a probe into alleged offshore money laundering by state investment company 1Malaysia Development Bhd. The ringgit is already Asia's worst-performing currency in the past 12 months amid the political scandal involving 1MDB and plunging commodity prices.

"The '1MDB wound' is getting fresh knocks from the US," said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. "Malaysia has suffered from the pre-existing commodity dent and softer currency that could exacerbate the vulnerabilities from external debt." Mr Najib's press officer didn't immediately respond to a call and text message seeking comment on the New York Times report.