This article first appeared in The Edge Financial Daily on April 17, 2019

KUALA LUMPUR: The ringgit has continued weakening to almost a three-month low against the US dollar due to concerns that the global index provider FTSE Russell may downgrade Malaysian bonds, as a result the debt papers may be excluded from its global index.

Noting that Malaysia is on its watchlist, FTSE Russell in a statement on Monday said: “Malaysia — currently assigned a ‘2’ and included to the WGBI (FTSE World Government Bond Index) since 2004, is being considered for a potential downgrade to ‘1’ which would render Malaysia ineligible for inclusion in the WGBI.”

At the time of writing, the ringgit depreciated 0.58% to 4.1325 against the greenback. In the past 12 months, the exchange rate was hovering between 3.8783 and 4.2020.

This year’s lowest level was at 4.1453 against the US dollar on Jan 24.

Citing Mizuho Bank Ltd, Bloom-berg said the ringgit’s decline yesterday was driven by concern that FTSE Russell may drop Malaysian bonds from its global index, with falling oil prices also weighing on the currency.

Brent crude futures declined 0.04% to US$71.15 per barrel, at the time of writing.

In AmBankFXDaily note yesterday, AmBank group chief economist and head of research Dr Anthony Dass is expecting the ringgit to trade between its support level of 4.0941 and 4.1010 while the resistance is pinned at 4.1168 and 4.1226.

Meanwhile, FXTM Research analyst Lukman Otunuga, in a note last Friday said the USD/MYR broke beyond the 4.06 to 4.10 range last week that it has held since February, now trading closer to 4.12.

“Further weakness for the currency pair may see it re-test its year-to-date highs of 4.14, as 4.10 now becomes the new support level,” he added.

Over the past year, against the greenback, the ringgit has weakened 5.36%, while it has depreciated 3.16% versus the Singapore dollar, 4.39% against the yen and 6.44% versus Chinese renminbi, according to Bloomberg data.

Elsewhere, the British pound and Australian dollar fell 8.64% and 7.81% respectively.