The Malaysian ringgit hovered at a seven-month low on Monday as global growth concerns weighed on Asian currencies, while the Russian rouble opened at a near 15-month low after a short-lived mutiny by heavily armed mercenaries over the weekend.
The ringgit, which has lost about 6% this year, weakened for a sixth consecutive session, falling as much as 0.3% to its lowest level since November, dragged also by uncertainty ahead of state elections.
“There could be a question mark over the sustainability of the current coalition government as the state elections are coming up very soon, and there is also the issue with Bank Negara Malaysia (BNM), which is clearly in the pausing mood and unlikely to shift to additional rate hikes,” said Alvin Tan, head of Asia foreign exchange strategy at RBC Capital Markets.
Tan added that the market was also sensing that BNM was not very concerned about the ringgit’s depreciation and so investors were basically continuing to push down the currency further.
Most other Asian currencies were also subdued, with the Thai baht, Indonesian rupiah and the Taiwanese dollar depreciating between 0.1% and 0.3%.
The dollar held steady near a one-week high against its major peers.
Fiona Lim, senior FX strategist at Maybank, suggested that the slew of weaker prelim PMI numbers released at the end of last week has put cyclical Asian currencies under pressure.
Activity data from Europe and United States on Friday soured risk sentiment, fuelling concerns that the world economy would have to slow down sharply amid hawkish comments from central banks that rate rises may have further to go to tame inflation.
Meanwhile, investors were also on guard after dramatic weekend events in Russia, where mercenaries made a short-lived rebellion, seizing the southern city of Rostov and advancing on Moscow demanding the removal of Russian military commanders in charge of the war in Ukraine.
The Russian rouble opened at a near 15-month low against the dollar in early morning trade, responding for the first time to the aborted mutiny.
China returned from a holiday with the yuan weakening 0.5% against the dollar, catching up with offshore falls on Thursday and Friday.
Investors are waiting for a big burst of stimulus from China before they make more aggressive bets on a recovery, having spent the past few months disappointed by economic data and a lack of meaningful policy response from Beijing.
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