KUALA LUMPUR, Aug 11 ― Malaysia’s ringgit fell along with other Asian currencies as China’s record weakening in its daily reference rate spurred the biggest decline in the yuan since a dollar peg ended a decade ago.

China took the unprecedented step just days after data showed exports contracted in July for a fifth month this year, underscoring concern that the region’s largest economy is slowing. Malaysia’s currency is Asia’s worst performer in 2015 as a slump in Brent crude weighs on the oil exporter’s earnings. A political scandal involving the prime minister and a looming US interest-rate increase have sent the ringgit to a 17-year low, triggering capital outflows.

“This is some form of devaluation by China,” said Sean Yokota, the Singapore-based head of Asian strategy at Skandinaviska Enskilda Banken AB. “There’s downside risk to Chinese growth and that’s generally negative for Asia.”

The ringgit retreated 0.3 per cent for a fifth day of losses to 3.9405 a dollar as of 10.32am in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It earlier fell to 3.9412, the weakest level since 1998.

Advertisement

A government report on Thursday may show Malaysia’s second- quarter economic growth slowed to 4.5 per cent from 5.6 per cent in the previous three months, according to the median estimate in a Bloomberg survey. That would be the slowest pace since early 2013.

Weaker currencies would tend to support exports by making goods more competitive overseas at the same time as pushing up the cost of imports. Malaysia’s shipments unexpectedly rose in June, increasing for only the second month this year. Brent crude prices have more than halved from 2014’s peak to US$50 (RM197) a barrel.

Malaysia’s government bonds fell, with the five-year yield rising four basis points to 3.88 per cent, according to data compiled by Bloomberg. ― Bloomberg

Advertisement