Malaysia ringgit weakens offshore after Mahathir-led coalition wins election

Malaysia ringgit weakens offshore after Mahathir-led coalition wins election

This photo illustration shows Malaysian ringgit banknotes in Kuala Lumpur on Jul 6, 2015. (Photo: AFP/Mohd Rasfan)

KUALA LUMPUR: Malaysia's currency weakened in offshore trading after the Mahathir Mohamad-led Pakatan Harapan coalition pulled off a shock victory, toppling the 61-year rule of the Barisan Nasional.

The ringgit one-month non-deliverable forward fell 2.4 per cent to 4.07 against the US dollar, its biggest daily fall in a year and a half. It recovered some ground on Thursday morning, although it was still down 1.7 per cent at 9am. 

Global ratings agency Moody's said the country was now in uncharted territory.

"The surprise win by Mahathir's coalition party is likely to see an increase in policy uncertainty at least in the short term with market volatility likely to be higher," said Sian Fenner, lead Asian economist at Oxford Economics.

But, highlighting investor worries, the US-traded iShares MSCI Malaysia ETF plunged 6 per cent overnight to a one-year low.

The national stock exchange Bursa Malaysia said trading would be suspended on Thursday and Friday in line with public holidays declared by the government.

Mahathir has promised to reverse a goods and services tax introduced by Najib during his first 100 days in power and review foreign investments.

Moody's said some of Mahathir's campaign promises, including the GST and a reintroduction of fuel subsidies, could be credit negative for Malaysia's sovereign debt rating.

Source: Reuters/aj/mz