Malaysia is reportedly one of Asia’s worst-hit economies in the face of rising US interest rates and the dollar.
According to The Wall Street Journal today, foreign investors sold US$5.3 billion of Malaysian stocks and bonds in November, the largest monthly outflow since September 2011, according to ANZ Bank.
"That is almost a quarter of the US$22.1 billion pulled from emerging markets in the region, excluding China," wrote WSJ.
The bulk of this, it said, was US$4.5 billion of bonds, the biggest monthly debt outflow on record, according to ANZ.
This comes as the ringgit continues to slide amidst a loss of market confidence in the country's financial standing, of which the growing 1MDB scandal was last week cited by prominent Malaysian economist Jomo Kwame Sundaram as one of the contributing factors.
"Despite the government’s various attempts to support the currency, the ringgit has lost 6.5 percent of its value against the greenback since the US election, hitting a nearly 19-year low on Nov 30.
"On Thursday, the currency weakened 0.9 percent, following the Federal Reserve’s announcement of its first rate increase in 2016," wrote WSJ.
"Malaysia’s Achilles' heel is the high level of foreign ownership of its government bonds.
"Foreign money is flighty, a factor that can accelerate a liquidity crunch during times of stress," the financial daily reported.
Closing on week low
Meanwhile, Bernama reported the ringgit opening lower for the last trading day of the week, dampened by external sentiment, a dealer said.
At 9am, the ringgit was traded at 4.4660/4690 versus the US dollar from 4.4440/4480 at yesterday's closing.
Commenting on the US dollar's strength, FXTM research analyst Lukman Otunuga said from a technical standpoint, the dollar is heavily bullish on the daily timeframe, with yesterday's hawkish surprise sending the US dollar index to fresh 14-year highs above 102.50.
"The dollar's strength could become a key theme in 2017 as the improving sentiment towards the US entices bullish investors to propel the greenback higher," Bernama reported Otunuga as saying in a statement.
Against a basket of major currencies, the ringgit traded higher.
Vis-a-vis the Singapore dollar, the ringgit rose to 3.0945/0983 from 3.1049/1096 and versus the yen, it improved to 3.7758/7796 from 3.7846/7894 on Thursday.
Against the British pound, the local currency appreciated to 5.5320/5380 from 5.5873/5949, while against the euro it rose to 4.6518/6563 from 4.6851/6921.
