Ringgit in further heavy sell-off amid 1MDB probe

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Ringgit dropsThe sell-off in the Malaysian ringgit, already among the world’s worst performing currencies this year, reached new intensities on September 25 as the currency crossed the 4.40-mark to the US dollar in day trading in the worst weekly slide since 1998.

Former premier Mahathir Mohamad imposed a fixed ringgit exchange rate of 3.80 per dollar in 1998, after the currency plunged 35 per cent the previous year. The peg stood until July 2005.

The currency has declined 26 per cent in the past 12 months. In addition, Brent crude prices that have halved in that time weigh on earnings for the region’s only major net oil exporter. China, Malaysia’s biggest trading partner, is heading for its slowest annual growth in more than two decades and markets are focused on the impact that may have on the global economy.

The slump of the ringgit may even run further amid a toxic mix of these shaky economic fundamentals and the spreading of the political crisis involving state fund 1Malaysia Development Berhad (1MDB), which is being probed by the US Federal Bureau of Investigation over money laundering, while the US Justice Department is looking into property purchases associated with Prime Minister Najib Razak’s stepson.

One of the few advantages of the currency devaluation is that it may help the country clean up the scandal-hit fund. Despite political controversy, 1MDB is trying to sell its power assets. The declining ringgit could give foreign bidders more motivation for a purchase.

1MDB has shortlisted bidders including Qatar’s Nebras Power and Hong Kong-listed CGN Meiya Power Holdings for the sale. Saudi Arabia’s Acwa Power International and Tenaga Nasional Bhd., Malaysia’s biggest listed energy company, were also picked to submit final offers for the power plants. The assets may fetch an equity value of as much as 8 billion ringgit, which translates into $1.82 billion as of September 25, but would have been worth $2.53 billion one year ago.

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Reading Time: 2 minutes

The sell-off in the Malaysian ringgit, already among the world’s worst performing currencies this year, reached new intensities on September 25 as the currency crossed the 4.40-mark to the US dollar in day trading in the worst weekly slide since 1998.

Reading Time: 2 minutes

Ringgit dropsThe sell-off in the Malaysian ringgit, already among the world’s worst performing currencies this year, reached new intensities on September 25 as the currency crossed the 4.40-mark to the US dollar in day trading in the worst weekly slide since 1998.

Former premier Mahathir Mohamad imposed a fixed ringgit exchange rate of 3.80 per dollar in 1998, after the currency plunged 35 per cent the previous year. The peg stood until July 2005.

The currency has declined 26 per cent in the past 12 months. In addition, Brent crude prices that have halved in that time weigh on earnings for the region’s only major net oil exporter. China, Malaysia’s biggest trading partner, is heading for its slowest annual growth in more than two decades and markets are focused on the impact that may have on the global economy.

The slump of the ringgit may even run further amid a toxic mix of these shaky economic fundamentals and the spreading of the political crisis involving state fund 1Malaysia Development Berhad (1MDB), which is being probed by the US Federal Bureau of Investigation over money laundering, while the US Justice Department is looking into property purchases associated with Prime Minister Najib Razak’s stepson.

One of the few advantages of the currency devaluation is that it may help the country clean up the scandal-hit fund. Despite political controversy, 1MDB is trying to sell its power assets. The declining ringgit could give foreign bidders more motivation for a purchase.

1MDB has shortlisted bidders including Qatar’s Nebras Power and Hong Kong-listed CGN Meiya Power Holdings for the sale. Saudi Arabia’s Acwa Power International and Tenaga Nasional Bhd., Malaysia’s biggest listed energy company, were also picked to submit final offers for the power plants. The assets may fetch an equity value of as much as 8 billion ringgit, which translates into $1.82 billion as of September 25, but would have been worth $2.53 billion one year ago.

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