Ringgit gets no reprieve as it slides with oil on slowing China

Posted by Trading Advisor on 2:12 PM with No comments
Malaysia's ringgit fell for an 11th week in its longest stretch of losses since 1993 as lower energy prices weigh on the oil exporter's earnings and capital flows out of emerging markets amid slowing Chinese growth.

ringgit.jpgThe nation's foreign-exchange reserves have fallen 19 per cent this year, fueling speculation the central bank bought the ringgit to stem declines in Asia's worst-performing currency. Data for the last two weeks of August are due after markets close on Friday, while a report on exports due at noon is forecast to show growth slowed and the trade surplus shrank. Malaysia's benchmark stock index dropped this week and is down more than nine per cent in 2015, with a US interest-rate increase likely to spur more outflows.

"For the ringgit, it has almost become a perfect storm," said Mitul Kotecha, head of Asia Pacific currency strategy at Barclays Plc in Singapore. "The external position has come under focus. There are lower oil prices, weaker external demand and looming Federal Reserve rate hikes." The ringgit depreciated 1.4 per cent in the past five days and 0.3 per cent on Friday to 4.2595 a dollar as of 10:30 am in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It has weakened 18 per cent this year and fell to a 17-year low of 4.2990 on Aug 26.