This article first appeared in The Edge Financial Daily, on January 13, 2016.

KUALA LUMPUR: The ringgit weakened to as low as 4.4310 against the US dollar yesterday as global crude oil prices slipped to a near 12-year low on glut concerns, and as national oil company Petroliam Nasional Bhd (Petronas) warned that oil would see two to three more tough years, with prices averaging at US$30 (RM132.60) per barrel this year, sparking fresh concerns over Malaysia’s sliding oil and gas revenues.

The ringgit’s fall also came ahead of China’s release of its trade data — scheduled to be released today — amid expectations of slower growth in the republic.

At the end of trading hours yesterday, the ringgit was trading at 4.4140 against the greenback after having weakened 0.65% or 0.0287, as Brent crude touched US$30.43 a barrel, the lowest since April 2004, before recovering to US$31.43 at press time, down 12 cents or 0.38% — according to Reuters.

The West Texas Intermediate, meanwhile, slumped to as low as US$30.41 per barrel — a level last seen in December 2003 — before inching back to US$31.06, down 35 cents or 1.11%.

The local currency, the worst performing in Asia last year after retreating some 19%, has shed 2.79% since January this year, while oil prices had retreated about 16%. 

The ringgit also ended the day 0.34% or 0.0103 weaker against the Singapore dollar at 3.0642.

Maybank global markets head of foreign exchange research Saktiandi Supaat said the local currency’s slump yesterday was largely because Petronas chief executive officer Wan Zulkiflee Wan Ariffin had commented that oil would see more tough years, and made his US$30 price forecast for the year.  

“Market is also waiting for China’s trade data [for December] tomorrow,” Saktiandi told The Edge Financial Daily when contacted.

He also dismissed concerns that the slump had anything to do with international rating agency Moody’s move in revising Malaysia’s outlook to stable from positive on Monday — though Moody’s also affirmed the country’s A3 sovereign rating — and said the news has already been priced in. 

“The downward trend is likely to continue based on China trade data this week and further oil declines even as it remains stable today (yesterday),” he added.

He said the support level for the ringgit now is at around the 4.38-4.40 range. 

Saktiandi added the ringgit’s catalysts are still external factors such as oil prices, trade data outlook for China, and any changes to Budget 2016’s assumption on oil prices.

Prime Minister Datuk Seri Najib Razak said last Friday that Budget 2016 would need to be recalibrated to take into account global economic developments and oil prices. The budget was based on the assumption that oil prices in 2016 would average at US$48 per barrel.

In a note yesterday, Ambank Global Market Research & Strategy said it expects the ringgit to trade at between 4.3740 and 4.4190 against the US dollar through the day.

“If the resistance of 4.4190 is breached, we expect the ringgit to trade higher to 4.4300. If the support of 4.3740 is broken, the next support is at 4.3450,” Ambank added.

Meanwhile, Asian Finance Bank Bhd head of foreign exchange and bond trading Zulkiflee Mohd Nidzam was quoted by Bloomberg as saying that “falling crude oil prices and uncertainty involving the slowdown in China are weighing on the ringgit.”

“If these persist, the ringgit could weaken further to 4.45 a dollar in the near term,” Zulkiflee said.