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Ringgit depreciates most in two weeks on global growth concern
[KUALA LUMPUR] Malaysia's ringgit fell the most in two weeks as Asian shares tracked Friday's losses in the US and Europe after the Federal Reserve's decision to keep interest rates unchanged reignited concern that global growth is deteriorating.
Odds of a Fed rate increase at this year's two remaining meetings receded after Chair Janet Yellen noted China's slowing economy and financial market turmoil when she left borrowing costs near zero. The ringgit is already Asia's worst-performing currency in 2015 as falling Brent crude prices weigh on the oil exporter's earnings.
The currency dropped as much as 1.2 per cent before trading 0.9 per cent lower at 4.2432 a dollar as of 8:48 am in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It rallied last week, halting the longest run of weekly losses since 1971, as the Fed's rate decision brought relief to emerging markets before the growth concern set in.
"The Fed said that it would wait because of concerns of external risks and it made the market think harder about the global growth environment," said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. "Because of the uncertainty as to the Fed's future response and the possibility it may be behind the curve, the equity market sold off and generally risk- off is negative for emerging-market currencies."