Ringgit hit by renewed political uncertainties and Greek crisis

PETALING JAYA - Uncertainties in Greece have hit Asian stock markets and currencies, with the ringgit taking the brunt of it amid renewed political concerns within the country.

The ringgit hit a 16-year low of 3.8142 against the US dollar during intra-day trade before settling at 3.809 against the greenback at 5pm.

It broke the crucial 3.80 level for the first time since the US dollar peg was removed 10 years ago.

The ringgit had been pegged at 3.80 against the dollar since 1998 at the height of the Asian Financial Crisis to 2005. Closing lower by 0.78% against the dollar yesterday, the ringgit was the biggest loser among Asian currencies.

Malaysia’s stock market took a heavy beating, with the benchmark FBM Kuala Lumpur Composite Index falling 17.19 points, or 1%, to close at 1,717.05 points.

Other Asian currencies and equity markets also closed lower yesterday due to capital outflow after Greece on Sunday voted against further austerity to qualify for new bailouts to help its ailing economy.

Greece’s Finance Minister Yanis Varoufakis resigned and the country is now at risk of exiting the single-currency eurozone, raising questions about the future of the 17-nation region.

Greek voters overwhelmingly rejected the bailout terms demanded by international creditors, with official figures from Sunday’s referendum in that country showing 61.31% voting “no” and 38.69% voting “yes”.

In Malaysia, the impact of capital outflow was worsened by renewed political uncertainties after The Wall Street Journal’s (WSJ) report on July 3 alleging that about US$700mil (RM2.6bil) from 1Malaysia Development Bhd (1MDB) had ended up in Prime Minister Datuk Seri Najib Tun Razak’s personal bank account .

The allegations had resulted in some quarters calling for Najib to take leave and be investigated.

1MDB is being ­investigated by the Public Accounts Committee while a special task force involving Bank Negara, MACC and the police are looking into WSJ’s claims.