| Hakim Hayat |
THE Malaysian ringgit has slumped to a 10-month low against the US dollar over concerns of declining oil prices, but a number of money changers in Brunei said it will not likely impact the exchange rate between the Brunei dollar and Malaysian ringgit.
By yesterday afternoon, one Singapore dollar could buy at least 2.63 Malaysian ringgit and the Malaysian currency slipped as far as 3.4375 against the US dollar, its weakest since February 2010, reports from Malaysia said.
The majority of money changers in the capital yesterday displayed a buying rate of 2.55 Malaysian ringgit to one Brunei dollar, a slightly lower rate than what the Singapore currency could buy, despite the fact that the Brunei currency is pegged to the Singapore currency.
This, according to a money changer, is because of the fact that the Brunei currency “has lower value than the Singapore currency”.
The ringgit has fallen 2.5 per cent against the US dollar in two days, the steepest decline since June 1998, Singapore’s Straits Times said.
Analysts said Malaysia is likely to be among the Asian countries hit hardest by the precipitous decline in global oil prices. Oil-related industries account for a third of Malaysian state revenue.
Meanwhile, the current level of oil price is favourable to Malaysia’s economy as it brings down the costs to businesses and consumers as well as less inflationary, Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz was quoted as saying by Bernama news agency.
However, Zeti said if the oil price dropped to a certain threshold level, government revenue and development expenditure were going to be affected.
Earlier, she said the normalisation of monetary policies by advanced economies had caused many regional currencies to experience depreciation.
Brent crude oil fell on Monday to a five-year low below $68 before recovering some of the losses as investors looked for a price floor after last week’s OPEC decision not to cut production.
Both US crude and Brent have fallen for five straight months, oil’s longest losing streak since the 2008 financial crisis, Reuters reported.
“The market is still very much in panic mode,” said Energy Aspects’ chief oil analyst Amrita Sen. “Once we get over the panic, Brent prices will probably stabilise at around $65-80 a barrel in the short term.”
Brent hit a low of $67.53 a barrel, the lowest since October 2009, and was down 50 cents at $69.65 a barrel. US crude fell 50 cents to $65.65 a barrel, having slipped to an intraday low of $63.72, the lowest since July 2009.
Oil lost more than 12 per cent after OPEC’s decision last Thursday.
With oil prices losing about 40 per cent since June, the impact is felt around the world as oil-producers from Iraq to Nigeria are revising 2015 budgets to reflect lower prices.