Ringgit falls most in three weeks as oil prices slump overnight

The ringgit has been Asia's worst-performing currency this year. – The Malaysian Insider file pic, October 13, 2015.

The ringgit fell the most in three weeks after Brent crude prices slumped overnight in New York, renewing concern about the impact on government finances for Asia’s only major oil exporter.

In a country that derives 22% of its income from oil-related sources, the halving in Brent crude prices from a 2014 peak has helped make the ringgit the region’s worst-performing currency this year.

The losses have been exacerbated by a selloff in emerging-market assets amid slowing economic growth in China and a looming US interest-rate increase. A report on Monday showed Malaysia’s factory output rose 3% in August from a year earlier, the slowest pace in 13 months.

The ringgit depreciated 1% to 4.1835 a dollar as of 9.36am in Kuala Lumpur, according to data from local banks compiled by Bloomberg. It declined 0.2% on Monday when Brent crude fell 5.3%, the biggest drop since September 1.

The currency rallied 6.8% last week in the steepest gain since 1998.

“The ringgit has given up some of its recent gains, mainly on the back of a fall in oil prices overnight,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd.

“The weaker industrial production data yesterday and an upcoming RM8.2 billion bond maturity due Thursday could also be weighing a bit on the currency.”

Malaysia has RM8.24 billion (US$1.97 billion) of local-currency bonds maturing on Thursday and is also set to auction RM3 billion of five-year Islamic notes on Tuesday. – Bloomberg