The ringgit lost as much as 0.8 per cent to 3.3720 per dollar, its weakest since March 2010, as offshore funds dumped the currency on fears that lower oil prices may hurt Malaysia, a net oil exporter and major palm oil producer.
Brent crude fell close to a four-year low touched in the previous session after OPEC decided not to cut oil output to support prices.
“The sharp drop in oil prices will weigh on the fiscal position and the trade balance position,” said Jonathan Cavenagh, senior FX strategist with Westpac in Singapore.
“Only central bank intervention stands in the way of further USD/MYR strength.”
Malaysia’s central bank was spotted intervening to limit the ringgit’s losses, traders said. Still, spot ringgit is seen weakening to 3.4295, the 61.8 per cent Fibonacci retracement of its appreciation from 2009 to 2011, analysts said.
The country narrowed the fiscal deficit to 3.9 per cent of gross domestic product in 2013, and Prime Minister Najib Razak wants to further trim the gap to 3.5 per cent this year and to 3 per cent in 2015, heading toward a balanced budget by 2020.
Malaysia‘s exports in September rose 2.0 per cent from a year earlier, missing market expectations, government data showed on November 7.
The ringgit was the No. 3 worst-performing emerging Asian currency with a 2.8 per cent loss against the dollar so far this year, according to Thomson Reuters data.
“We remain unconstructive on MYR,” said Sacha Tihanyi, a senior currency strategist for Scotiabank, said in a research note.
“Though USDMYR has traded through our end of year target of 3.30 rather rapidly in November, we continue to see further weakness and will likely be revising up our USDMYR forecasts for 2015 and 2016.”
South Korea‘s won and Taiwan‘s dollar underperformed the ringgit on concerns that a weaker yen will reduce competitiveness of those countries’ exporters - Reuters
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