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Malaysia may review budget if crude prices stay low
[KUALA LUMPUR] Malaysia's government may revise its budget for 2016 if crude oil prices remain low, state media reported on Thursday, as economic growth in the Southeast Asian country slows amid a global commodities slump.
The impact of a drop in oil prices has been particularly acute for Malaysia's ringgit. Compounded by economic slowdown in major trade partner China and domestic political turmoil, the ringgit is emerging Asia's worst-performing currency this year.
On Thursday, state news agency Bernama quoted Economic Planning Minister Abdul Wahid Omar as saying the budget was structured around the assumption that Brent Crude would average US$48 a barrel next year.
It was trading at US$37.00 a barrel on the Brent benchmark as at 1000 GMT. "If indeed this is the new normal, proper adjustments will be made," Bernama quoted Mr Abdul Wahid as saying.
The minister said he was optimistic that prices would rebound, according to the news agency.
The ringgit was around 4.334 against the US dollar in late afternoon trade after opening at 4.310. The decline comes amid positive sentiment toward the greenback following a decision by the US Federal Reserve to raise interest rates for the first time in almost a decade.
Mr Abdul Wahid said he expects the ringgit to be stable at an average 4.20 next year due to the likelihood of more US rate hikes, Bernama reported.
Most emerging Asian currencies initially rose on Thursday after the Fed signalled that further policy tightening beyond its rate hike would be slow. But the currencies weakened as China's yuan hit a four and a half year low.