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Malaysian ringgit sinks as lower oil and 1MDB saga hurt demand
[KUALA LUMPUR] Malaysia's ringgit fell to the lowest in more than two months as a decline in oil prices and a controversy involving a troubled state fund damped demand for the nation's assets.
The currency weakened as domestic financial markets reopened after a holiday on Monday even as Asian peers including the South Korean won climbed following comments from Federal Reserve governor Lael Brainard that damped speculation US interest rates will rise this month.
Brent crude dropped 0.7 per cent, erasing a gain Monday and adding to the pressure on the ringgit. Malaysia said it's confident of winning in an arbitration hearing where state investment company 1Malaysia Development Bhd is facing a claim for US$6.5 billion from Abu Dhabi's sovereign wealth fund.
"The ringgit is getting no joy from the oil markets right now," said Stephen Innes, a senior trader at Oanda Asia Pacific Pte in Singapore.
"The 1MDB political risk is still at the forefront."
The ringgit retreated 0.6 per cent to 4.0945 per US dollar as of 9:19am in Kuala Lumpur and reached 4.0975, the weakest since June 28, according to prices from local banks compiled by Bloomberg. The won advanced 0.5 per cent to 1,108.05 against the greenback.
1MDB and International Petroleum Investment Co PJSC are locked in a tussle that spilled over to repayments on bonds issued by the Malaysian company. 1MDB and its sole shareholder - Malaysia's Ministry of Finance - haven't performed their obligations toward Ipic, the Abu Dhabi fund said in a London stock exchange filing in June.