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Ringgit leads emerging currencies lower as stocks extend decline

Wednesday, August 3, 2016 - 10:26
35725959.2 (36140081) - 22_09_2015 - JAPAN RINGGIT.jpg
Malaysia's ringgit led a decline in emerging-market currencies as stocks retreated after a selloff in oil stoked concerns about global growth.

[KUALA LUMPUR] Malaysia's ringgit led a decline in emerging-market currencies as stocks retreated after a selloff in oil stoked concerns about global growth.

The ringgit slumped the most in five weeks and South Korea's won fell for a second day Wednesday as a gauge of developing-nation shares tracked losses in global equities. Brent crude weakened for a fifth session on Tuesday to close below US$42 a barrel for the first time since April, weighing on the outlook for Malaysia's oil exports.

"The won tends to be quite sensitive to global risk sentiment," said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd.

"For the ringgit, there's an additional factor in terms of the weaker oil price."

The ringgit depreciated 0.8 per cent, the most since June 24, to 4.0668 per dollar as of 9:25 am in Kuala Lumpur, according to prices from local banks compiled by Bloomberg.

The won was down 0.4 per cent to 1,115.50 versus the greenback, after reaching 1,106.35 on Tuesday, the highest level since June 2015. The MSCI Emerging Markets Index of shares fell 0.7 per cent, taking its two-day drop to 1.4 per cent.

South Korean Vice Finance Minister Choi Sang Mok said Tuesday the government is concerned about the pace of the won's recent appreciation and will take action to stabilise the market if there is excessive herd behaviour.

A Malaysian government report due Friday will probably show exports fell 3.7 per cent in June from a year earlier, the biggest drop since May 2015, according to the median forecast of economists in a Bloomberg survey.

The trade surplus likely widened to 6 billion ringgit (S$2 billion) from 3.26 billion ringgit in May, another survey showed.

BLOOMBERG