Ringgit leads emerging market losses as oil weighs on sentiment

The ringgit dropped the most since September and led declines in emerging markets as an overnight slide in Brent crude weighed on the outlook for the oil exporters' finances just as economic growth slows. Brent slipped below US$32 (RM135) a barrel on Tuesday after an agreement by Saudi Arabia and Russia to freeze oil production failed to temper concern about a global supply glut. A government report on Thursday will show Malaysia's economy expanded 4.9% in 2015 from 6% the year before and slowed in the fourth quarter from the third. "There was a pretty decent fall in oil prices and that's pushing down the ringgit," said Sean Yokota, Singapore-based head of Asia strategy at Skandinaviska Enskilda Banken AB. "In the last month there was a scare on the US economy. Some of that sentiment has bottomed out so the US dollar is strengthening again." The ringgit depreciated 1.5% to 4.2172 a dollar in Kuala Lumpur, the steepest loss since September 7, according to prices from local banks compiled by Bloomberg. A gauge of the US currency rose for a fourth day Tuesday and was little changed on Wednesday. Malaysia derives about 22% of state revenue from oil-related sources. The government stands to lose RM300 million for every US$1 drop in the price of the commodity, Plantation Industries and Commodities Minister Datuk Douglas Uggah Embas said in January. Brent has declined 13% this year after falling 35% in 2015. Gross domestic product increased 4.1% last quarter from a year earlier, slowing from 4.7% in the previous three months, according to the median estimate in a Bloomberg survey. Five-year government bonds fell, pushing the yield up five basis points to 3.44%, according to prices compiled by Bursa Malaysia. – Bloomberg, February 17, 2016.]]>