KUALA LUMPUR / Bloomberg
Malaysia’s ringgit slumped by the most in eight months after Federal Reserve Bank of Atlanta President Dennis Lockhart said a US interest-rate increase in June was “a real option.”
The comments sparked a surge in the greenback, with the Bloomberg Dollar Spot Index rising from the lowest level in a year. Brent crude hovered around US$45 a barrel after falling more than 6% in the past two days, dimming the outlook for Malaysia’s finances as Asia’s only major net oil exporter. The weakness in the commodity price helped send the ringgit to its lowest level since March 29.
While Lockhart said two rate increases are possible this year, futures are only pricing in a 12% probability of such a move by June and 55% by the final meeting of 2016 in December. Mitul Kotecha, the head of Asian foreign-exchange and interest-rate strategy at Barclays Plc in Singapore, said the moves lower in regional currencies reflected more of a “market positioning shift” than a fundamental one.