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Update: Ringgit falls for fifth day on lower oil, China growth concern

[KUALA LUMPUR] Malaysia's ringgit fell for a fifth day, the longest run of losses in a month, as an overnight decline in energy prices and an economic slowdown in China damped demand for the oil-exporting nation's assets.

Brent crude slumped 4 per cent on Monday, extending a decline that has contributed to a 19 per cent depreciation in the ringgit this year in Asia's worst performance. China, Malaysia's biggest overseas market, reported on Tuesday its exports contracted for a second month in August, while imports shrank the most since May.

"There are uncertainties over China's growth, declining oil prices, US Fed rate normalization and global risk aversion," said Leong Sook Mei, Southeast Asia head of global markets research at Bank of Tokyo-Mitsubishi UFJ in Singapore. "It's a given that, in this kind of environment, Asian currencies will probably be very weak." The ringgit declined 0.2 per cent to 4.3385 a dollar in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. The currency, which has lost 4 per cent in the past five days, earlier fell as much as 1 per cent to 4.3730, the lowest since January 1998.

The ringgit's drop was due to expectations of a depreciation in the yuan after China reported a decline in foreign-exchange reserves on Monday, according to Dushyant Padmanabhan, a strategist with Nomura Holdings Inc. in Singapore.

A majority of more than 150 market participants surveyed by Moody's Investors Service expect the ringgit and oil prices to stabilize, with 44 per cent saying they expect the currency to trade between 4 and 4.50 a dollar, according to a statement from the rating company issued on Tuesday.

Global funds reduced holdings of Malaysian government bonds by 4.3 per cent to 166.1 billion ringgit (S$54.5 billion) in August from July, the lowest level in five months, according to central bank data.

Sovereign bonds retreated, with the 10-year yield rising two basis points to 4.26 per cent, according to prices from Bursa Malaysia.