[SINGAPORE] Malaysia's ringgit led losses in Asia on speculation last week's rally was overdone given that oil prices remain depressed and China's economy is still slowing.
The ringgit climbed 2.1 per cent in the five days through Nov 20, rising along with other regional currencies after the Federal Reserve indicated it will increase interest rates gradually once it takes the first step, most likely in December.
Malaysia's exchange rate appreciated the most in two weeks on Monday as the dollar's seven-day relative-strength index reached 33 on Friday, near the 30 threshold that suggested the greenback was about to rebound.
"The ringgit was the best-performing currency last week, and today's pullback looks to be on the back of some profit- taking," said Khoon Goh, a Singapore-based senior foreign- exchange strategist at Australia & New Zealand Banking Group Ltd.
"The slight decline in oil prices also doesn't help sentiment." The ringgit weakened 0.4 per cent to 4.3025 a dollar as of 11am in Kuala Lumpur, after gaining 1.4 per cent on Friday, according to prices from local banks compiled by Bloomberg.
It has still dropped 19 per cent this year, the most in Asia, as Brent crude prices that have more than halved from a 2014 peak cut revenue for the region's only major net oil exporter.
Emerging-market currencies have come under pressure this year amid a looming US rate increase that's spurred capital outflows. The odds for a December Fed move currently stand at 68 per cent.
Overseas investors sold a net RM320.1 million (S$105.7 million) of Malaysian shares last week, according to a report from MIDF Amanah Investment Bank on Monday. That took net sales this year to RM18.5 billion, far exceeding the RM6.9 billion for all of 2014.
The nation's foreign-exchange reserves decreased to US$93.9 billion in the two weeks to Nov 13 from US$94 billion, suggesting the central bank is still intervening to support the currency. The holdings have dropped 19 per cent this year.
The 10-year government bond yield rose three basis points to 4.3 per cent, while those on notes due in 2020 were steady at 3.76 per cent, prices from Bursa Malaysia show.