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Ringgit dips to weakest level since 1998 as outflows continue

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by December 19, 2016 General

The ringgit declined as much as 0.1 per cent to 4.4805 per dollar, a level unseen since January 1998. — Reuters picThe ringgit declined as much as 0.1 per cent to 4.4805 per dollar, a level unseen since January 1998. — Reuters picKUALA LUMPUR, Dec 19 — Malaysia’s ringgit touched the lowest level since the Asian financial crisis as investors continue to sell down emerging-market assets and after a crackdown on currency speculators last month exacerbated outflows.

The ringgit declined as much as 0.1 per cent to 4.4805 per dollar, a level unseen since January 1998, according to prices from local banks compiled by Bloomberg, before paring losses to trade little changed at 4.48 at 9:52 a.m. in Kuala Lumpur.

The ringgit has lost more than 6 per cent since the US election, the biggest decline in emerging Asia, as expectations that incoming American president Donald Trump will stoke inflation with his fiscal policies spurred outflows from the region. Sentiment toward Malaysian assets has also been hurt by the central bank’s move in November to clamp down on trading of non-deliverable forwards even as it provided greater onshore hedging flexibility with revised regulations.

“It is a confluence of the relative decline in cash metric, high foreign holding of bonds sold off, investors’ trepidation about FX controls and the underlying political or headline risks,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. — Bloomberg

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