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Ringgit falls to 16-year low vs US dollar as China data dims exports outlook

KUALA LUMPUR — The ringgit fell for a third day amid contractions in Malaysian and Chinese factory output, dimming the outlook for the South-east Asian economy that is under pressure from a slump in oil.

Malaysian ringgit bank notes. Photo: Reuters

Malaysian ringgit bank notes. Photo: Reuters

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KUALA LUMPUR — The ringgit fell for a third day amid contractions in Malaysian and Chinese factory output, dimming the outlook for the South-east Asian economy that is under pressure from a slump in oil.

The currency dropped to a 16-year low as the Nikkei Malaysia Purchasing Managers’ Index of manufacturing held below the level of 50, signalling a contraction for a fourth month in July, while a similar gauge in China was under that threshold for a fifth month. As Prime Minister Najib Razak deals with a corruption scandal linked to state investment company 1Malaysia Development Bhd, data on Wednesday (Aug 5) may show exports shrank again in June, as they have for most of this year.

The China PMI was not “good news for Malaysia exports given the heightened concerns over China’s struggling growth and the lower oil price”, said Mr Sim Moh Siong, a currency strategist at Bank of Singapore.

The ringgit weakened 0.2 per cent today (Aug 3) to RM3.8323 a US dollar as of 11.26 am in Kuala Lumpur, prices from local banks compiled by Bloomberg show. It earlier fell as much as 0.3 per cent to 3.8355, the lowest level since 1998 when the region was grappling with the Asian financial crisis.

Ten-year government bonds dropped for a seventh day, with the yield rising two basis points to 4.09 per cent, according to Bursa Malaysia prices. The five-year yield declined four basis points to 3.62 per cent.

Overseas shipments contracted 1.5 per cent in June from a year earlier, according to the median estimate in a Bloomberg survey ahead of Wednesday’s figures. They have only risen once this year and that was in March. BLOOMBERG

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