[KUALA LUMPUR] Malaysia's ringgit fell for an 11th week in its longest stretch of losses since 1993 as lower energy prices weigh on the oil exporter's earnings and capital flows out of emerging markets amid slowing Chinese growth.
The nation's foreign-exchange reserves have fallen 19 per cent this year, fueling speculation the central bank bought the ringgit to stem declines in Asia's worst-performing currency. Data for the last two weeks of August are due after markets close on Friday. While a report showed exports rose more than forecast in July, the decline in the trade surplus exceeded estimates. Malaysia's benchmark stock index dropped this week and is down almost 10 per cent in 2015, with a US interest-rate increase likely to spur more outflows.
"For the ringgit, it has almost become a perfect storm," said Mitul Kotecha, head of Asia Pacific currency strategy at Barclays Plc in Singapore. "The external position has come under focus. There are lower oil prices, weaker external demand and looming Federal Reserve rate hikes."
The currency depreciated 1.4 per cent in the past five days and 0.3 per cent on Friday to 4.2585 a dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It has weakened 18 per cent this year and fell to a 17-year low of 4.2990 on Aug 26.
Brent crude has halved in the past year, lowering government revenue for Malaysia, which derives 22 per cent of its income from oil-related sources. Exports rose 3.5 per cent in July from a year earlier, after advancing 5 per cent the previous month, government data showed Friday. The trade surplus narrowed to RM2.38 billion (US$559 million) from RM7.98 billion. Overseas shipments were expected to climb 3.2 per cent, while the trade gap was seen at RM6.3 billion, according to a Bloomberg survey.
Malaysia's reserve holdings declined 2.3 per cent to a six- year low of US$94.5 billion in the first 14 days of August from two weeks earlier. While the reserves remain sufficient, their adequacy is the weakest in the Association of Southeast Asian Nations, Moody's Investors Service sovereign analyst Christian de Guzman said in an Aug 27 briefing in Kuala Lumpur.
Government bonds advanced, with the 10-year yield falling 19 basis points this week and five basis points Friday to 4.21 per cent, according to prices from Bursa Malaysia.