Ringgit extends emerging-currency slump with oil as yuan steady

[KUALA LUMPUR] Malaysia's ringgit slid, extending the worst week for Asian currencies since 2011, as oil slipped toward a six-year low. Most shares in the region climbed as China kept its currency steady for a second day.

The ringgit weakened 0.8 per cent by 9:45 am in Hong Kong, dragging the Bloomberg JPMorgan Asia Dollar Index to a fifth straight loss, the longest such streak since February. The dollar was stronger against most peers and US equity-index futures were little changed. About nine shares rose for every seven that fell on the MSCI Asia Pacific Index, while Malaysian equities retreated. US oil sank 1.2 per cent amid ongoing concern over a global glut.

China's shock devaluation of its currency last week focused investors minds on frailties in other emerging markets, notably Malaysia and Turkey, which both are facing political crises. The yuan will probably move in both directions in the future, according to Ma Jun, chief economist at China's central bank. A report on US manufacturing Monday may offer clues on the timing of the Federal Reserve's first interest-rate increase since 2006.

"The real lesson from the yuan last week was that the US dollar is likely to appreciate against other Asian currencies," Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland, said by instant message. "With a September Fed hike priced around a 50 per cent probability, any developments that suggest a change in timing are being acted upon."

BLOOMBERG