Ringgit headed for 10th weekly loss before anti-Najib protests

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(Aug 28): The ringgit was headed for a 10th weekly decline, its longest losing streak since 2013, as thousands of protesters prepared for a weekend march to demand Prime Minister Najib Razak’s resignation.

The ringgit has dropped 25% in the past year, the biggest decline in Asia, as a scandal involving political donations to Najib damps sentiment and a 53% drop in Brent crude prices hurts the finances of the oil-exporting nation. The yield on 10-year government bonds rose to a seven-year high as a plunge in Chinese equities this week deepened concerns about growth in Malaysia’s biggest overseas market.

“Overall, sentiment is still very weak,” said Choong Yin Pheng, senior manager for bonds and economic research at Hong Leong Bank Bhd in Kuala Lumpur. “There are still a lot of concerns on the growth outlook as well as some of the domestic issues.”

The ringgit depreciated 1.1% in the past five days to 4.2273 a dollar as of 10.18am in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. The currency rose 0.2% Friday and Hong Leong Bank’s Choong said gains were supported by a 10% overnight jump in Brent.

“Despite a recovery in oil prices, the ringgit is failing to fully benefit from this as offshore sentiment towards Malaysian assets remains poor,” said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd in Singapore. “There is perhaps some nervousness ahead of the Bersih 4 rally this weekend, which had been deemed illegal by the authorities.”

Weekend Protest

Police are bracing for thousands of protesters to march through parts of the capital this weekend demanding Najib’s resignation after an official probe showed the premier received billions of ringgit in his private accounts in 2013. The Coalition for Clean and Fair Elections, or Bersih, expects about 200,000 people to demonstrate in Kuala Lumpur in its third major protest since Najib came to power in 2009.

Christian de Guzman, a Singapore-based vice-president at Moody’s Investors Service, said Thursday clouds are gathering over the positive outlook for Malaysia’s A3 rating, the fourth-lowest investment grade.

Sovereign bonds fell this week, with the 10-year yield rising three basis points to 4.42%, according to prices from Bursa Malaysia. It reached 4.45% Wednesday, the highest since 2008.