KUALA LUMPUR (May 12): Petroliam Nasional Bhd (Petronas) said a weakening ringgit against the US dollar "generally has a positive impact" on its financial results as most of the Malaysian national oil company's revenue is denominated in US dollars.

In an emailed reply to The Edge’s enquiries, Petronas said a weaker ringgit against the US dollar is expected to have a minimal impact on its international investments and operations as the company's income and spending are denominated in the greenback.

"Petronas’ domestic investments and operations may, however, experience higher operational cost as a result of the weakening ringgit.

"In general, Petronas’ capital allocation is split equally between international and domestic operations, encompassing our investments in core and non-traditional businesses,” the company explained.

The local note has weakened against a strengthening US dollar in anticipation of US interest hikes to curb inflation and as investors seek the greenback as a haven at a time when they see downside risks to global economic growth stemming from the Russia-Ukraine war besides China’s Covid-19 outbreak.

At the time of writing on Thursday (May 12), the ringgit had weakened to 4.3878 against the US dollar from Wednesday’s close at 4.3770.

The exchange rate stayed between 4.3752 and 4.3878 so far on Thursday. Over the past one year, the local currency was transacted at between 4.1070 and 4.3878 against the greenback.

Petronas’ financials had improved in the financial year ended Dec 31, 2021 (FY21).

According to the company's website, its FY21 profit after tax stood at RM48.6 billion compared to a loss after tax of RM21.03 billion the year before.

Revenue rose to RM247.96 billion from RM178.74 billion.

In a statement issued in conjunction with the announcement of the FY21 results on March 1, 2022, the company said the oil and gas industry is expected to continue operating in a challenging environment due to market uncertainties and heightened geopolitical risks. 

"Amid these challenges, the group will focus on executing our growth plans and sustainability efforts while remaining committed to delivering operational and commercial excellence,” Petronas said.