Ringgit drops for third week before GDP, current-account reports

[KUALA LUMPUR] Malaysia's ringgit headed for a third week of losses before reports that analysts said will show economic growth slowed last quarter and the current-account surplus shrank.

The currency was poised for its longest weekly losing streak since February on speculation slowing global growth will reduce demand for the nation's exports. Sentiment toward the ringgit has also been affected by concern troubled state-owned investment company 1Malaysia Development Bhd will delay debt repayments although this eased after one was made this week, according to Hong Leong Bank Bhd.

"We have key data risk," said Choong Yin Pheng, senior manager for bonds and economic research at Hong Leong Bank in Kuala Lumpur.

"The current-account numbers will give a signal of how much buffer the country has when it comes to external shocks. A combination of external headwinds and the moderation on the domestic front" are weighing on Malaysia, she said.

The ringgit dropped 0.8 per cent this week to 4.0360 per dollar as of 10:55 am in Kuala Lumpur, set for its longest losing streak since the period ended Feb 26, according to prices from local banks compiled by Bloomberg. The currency fell 0.3 per cent on Friday.

The current-account surplus narrowed to 6.8 billion ringgit (S$2.31 billion) in the first quarter from 11.4 billion ringgit in the previous three months, according to the median estimate of economists in a Bloomberg survey before the data is published at noon local time. Growth in gross domestic product slowed to 4 per cent, from 4.5 per cent, a separate survey showed.

Abu Dhabi's International Petroleum Investment Co paid US$52.4 million of interest on 1MDB's 5.99 per cent bonds that it guarantees when the payment fell due on Wednesday, according to a filing to the London Stock Exchange.

The development offered 1MDB respite after a dispute with the Abu Dhabi company resulted in the Malaysian fund defaulting on a separate note last month.

Malaysia's 10-year bonds were little changed for the week, with the yield at 3.88 per cent, according to data from Bursa Malaysia. The price of the 3.955 per cent security due in September 2025 was 100.60.

BLOOMBERG