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Ringgit weakens to over 20-year low of 2.8538 against Singdollar
[SINGAPORE] The Malaysian ringgit lost further ground against the Singapore dollar on Wednesday, trading at 2.8538 to the Singdollar at about 1:35pm, down from its close at 2.82 on Tuesday.
This is the weakest that the ringgit has been against the Singdollar on record.
China's surprise devaluation of the yuan this week has lumped more pressure on the ringgit, Asia's worst-performing currency in the past 12 months.
Brent crude prices that have more than halved from their 2014 peak are hurting Malaysia's revenue as a net oil exporter.
The ringgit tumbled more than 1 per cent to 4.0025 a US dollar as of 11.02am in Kuala Lumpur.
"China's yuan move is recalibrating Asian currencies across the board," said Mr Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. "If the yuan drops another 5 percent to 10 percent, then 4.20 for the ringgit (against the US dollar) isn't far-fetched."
A government report on Thursday may show Malaysia's second-quarter economic growth slowed to 4.5 per cent from 5.6 percent in the previous three months, according to the median estimate in a Bloomberg survey.
That would be the slowest pace since early 2013.
The Southeast Asian nation's foreign-exchange reserves dropped below US$100 billion last month for the first time since 2010 to US$96.7 billion. The central bank will continue to "smoothen out excessive volatility," Ms Julia Goh, an analyst at Singapore's United Overseas Bank Ltd., wrote in a research note on Tuesday.
The monetary authority has spent US$25 billion defending the currency since July 2014, after adjusting for valuation effects, Mr Philip McNicholas, a Singapore-based economist at BNP Paribas SA, wrote in a July 24 report.