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Ringgit sinks as crude's tumble bodes ill for Malaysia finances

Tuesday, August 2, 2016 - 09:24
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The ringgit led a decline in Asian currencies as slumping oil prices dim the prospects for Malaysia's export earnings.

[KUALA LUMPUR] The ringgit led a decline in Asian currencies as slumping oil prices dim the prospects for Malaysia's export earnings.

Brent crude sank 0.8 per cent to close at its lowest level in four months on Monday, while US oil slid into a bear market amid renewed concern there is a global supply glut.

Malaysia loses 450 million ringgit (S$148.7 million) in annual income for every US$1 drop in oil and the nation derives about a fifth of its revenue from energy-related sources.

"The wider story is the oil price slippage for the past few weeks," said Vishnu Varathan, a senior economist at Mizuho Bank Ltd in Singapore.

"In Malaysia's case, oil has the most pronounced effect so that's keeping the ringgit in check."

The ringgit weakened 0.5 per cent to 4.0415 per US dollar as of 8:41 am in Kuala Lumpur, according to prices from local banks compiled by Bloomberg.

It has lost 1.1 per cent in the past month, the worst performance among Asian currencies.

BLOOMBERG

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