Ringgit pares loss with oil as markets gyrate on close UK Vote

KUALA LUMPUR: Malaysia's ringgit pared its biggest drop in a month after starting the session higher as incoming results from the UK vote to decide whether it stays or leaves the European Union showed an outcome is still too close to call.
 
The ringgit fell 0.5 percent to 4.0360 per dollar as of 10:16 a.m. in Kuala Lumpur, prices from local banks compiled by Bloomberg show. 

It dropped as much as 1.2 percent after rising earlier to a seven-week high of 3.9893. 

The central bank extended trading by an hour to 6pm on Friday to “facilitate market transactions.” 

The pound trimmed a loss of 5.8 percent as the vote count results swung between “Leave” and “Remain.”

While the European Union doesn’t feature as one of Malaysia's top export destinations, the uncertainty surrounding the U.K. vote has contributed to the highest volatility in the ringgit in Asia after the Japanese yen. Brent crude slid about 2 percent to below $50 a barrel after dropping as much as 4 percent as the referendum results flowed in, dimming the outlook for Malaysia's finances as the region's only major net oil exporter.

Malaysia's currency has dropped the most in Asia this quarter. 

The ringgit and South Korea's won have the highest sensitivity to moves in the MSCI Asia Pacific ex- Japan Index of shares, a proxy for risk sentiment in the region, and making the currencies the most exposed to the outcome of the U.K. poll, according to an analysis by Bloomberg strategist Masaki Kondo.

“Bank Negara Malaysia, together with the Malaysian financial market participants, are monitoring and will remain vigilant to any potential emerging risks and challenges to the domestic financial markets,” the central bank said in the statement. “It should be emphasized that liquidity in the domestic market remain ample and our financial markets are well positioned to face any major volatility.”

The FTSE Bursa Malaysia KLCI Index dropped 0.4 percent. The five-year government bond yield held at 3.45 percent, stock exchange prices show. The 10-year yield was steady at 3.88 percent. - Bloomberg