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Ringgit leads drop in Asia as crude tumbles despite Saudi deal
[KUALA LUMPUR] Malaysia's ringgit dropped the most since November and led declines in Asia as a renewed slide in Brent crude threatens the oil exporters' finances just as economic growth is slowing.
Brent slipped below US$32 a barrel overnight after an agreement by Saudi Arabia and Russia to freeze oil production failed to temper concern about a global supply glut.
A government report on Thursday will show Malaysia's economy expanded 4.9 per cent in 2015 from 6 per cent the year before and slowed in the fourth quarter from the third.
"There was a pretty decent fall in oil prices and that's pushing down the ringgit," said Sean Yokota, Singapore-based head of Asia strategy at Skandinaviska Enskilda Banken AB. "In the last month there was a scare on the US economy. Some of that sentiment has bottomed out so the US dollar is strengthening again."
The ringgit depreciated 1.4 per cent to 4.2110 a dollar as of 9.04am in Kuala Lumpur, the steepest loss since Nov 9, according to prices from local banks compiled by Bloomberg. A gauge of the US currency rose for a fifth day.
Malaysia derives about 22 per cent of state revenue from oil-related sources. The government stands to lose RM300 million (S$100.2 million) for every US$1 drop in the price of the commodity, Plantation Industries and Commodities Minister Douglas Uggah Embas said in January. Brent has declined 14 per cent this year after falling 35 per cent in 2015.
Gross domestic product increased 4.1 per cent last quarter from a year earlier, slowing from 4.7 per cent in the previous three months, according to the median estimate in a Bloomberg survey.