Risk assets and oil prices may be hit, taking down currencies of commodity producing countries, especially the Russian ruble, Colombian peso and ringgit, according to Bloomberg.
KUALA LUMPUR: The ringgit fell to the lowest in almost a year early Friday after Malaysia cut its economic growth target and scrapped plans to balance the state budget by 2020.
The US$/ringgit rose 0.1% to 4.1615, highest since November.
The pair climbed 0.2% this week, putting it on course for a fourth week of gains
The support 4.1227, 4.1257, 4.0900; resistance 4.1645, 4.1768, 4.1990
.
The government expects GDP growth to average 4.5%-5.5% in 2018 to 2020, compared with an earlier target of 5%-6%, Prime Minister Tun Dr Mahathir Mohamad said in review of 11th Malaysia Plan on Thursday.
The budget deficit is now estimated to widen to 3% of GDP compared with an initial plan to balance the books in two years.
ANZ pegs near-term resistance for US$/ringgit at 4.20 with ringgit largely taking its cues from broader dollar moves, says Khoon Goh, head of Asia research in Singapore
Focus will be on Budget 2019 to be unveiled in early November as investors look to see if the govt continues on a fiscal consolidation path.
The ringgit is among Asian FX that are undervalued, which helps to explain why it’s been more resilient amid the sell-off in regional currencies, according to a Bank of America Merrill Lynch note.
The 10-year govt bond yield ended steady Thursday at 4.13%.
Govt has paid coupon due on 1MDB’s US$1.75b Langat bonds and will continue to honour commitments on the state fund’s debt: Finance Minister Lim Guan Eng.
Authorities are still studying whether to increase rates on existing taxes or introduce new levies: Guan Eng.- Bloomberg
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