Malaysian ringgit slumps to weakest level in 17yrs
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Malaysian ringgit slumps to weakest level in 17yrs
Malaysia’s ringgit currency slid past 4.0 to the dollar on Wednesday for the first time in 17 years, pounded by concerns over economic growth and political uncertainty stemming from a government financial scandal.
Analysts said China’s surprise devaluation of the yuan also pressured the ringgit, the worst-performing currency in Asia over the past year.
Malaysia’s economy has been dogged for months by concerns that slumping oil prices will harm growth in the oil-exporting country.
Prime Minister Najib Razak also is struggling to fend off corruption allegations related to his links with debt-ridden state investment firm 1Malaysia Development Berhad (1MDB).
“Malaysia’s vulnerability is heightened by deteriorating terms of trade, high debt, and a fragile fiscal position highly dependent on oil-related revenue,” said Chua Hak Bin, an economist with Bank of America Merrill Lynch.
“Political uncertainty and 1MDB are also hurting consumer and business confidence.”
The ringgit closed near 4.03 on Wednesday, down 1.36 percent on the day and more than 20 percent over the past year, according to Bloomberg News.
Najib has faced mounting pressure in the past year over allegations that hundreds of millions of dollars disappeared from deals involving 1MDB, which he launched in 2009.
The Wall Street Journal last month reported that Malaysian government investigators had found nearly $700 million was routed to Najib’s personal bank accounts.
Najib and 1MDB have denied wrongdoing, and Malaysia’s anti-graft agency has claimed the deposits were “donations” from unidentified parties, a contention that has been questioned by critics.
Global funds have pulled about $3 billion from the country’s stock market this year, Bloomberg said. Malaysia’s main stock index has lost more than 13 percent since April.
The ringgit’s level on Wednesday was the lowest since then-leader Mahathir Mohamad imposed capital controls and a peg of 3.8 ringgit per dollar in 1998 to shield the economy amid a regional financial crisis.
The government on Thursday unveils the figure for second-quarter economic growth, which analysts expect to have slowed from the previous quarter’s 5.6 percent.