The ringgit weakened by the most in four weeks as data pointing to a contraction in Malaysia’s factory output dimmed the outlook for an economy reeling from falling oil prices and a political scandal.

The spot rate dropped to a 16-year low and is Asia’s worst- performing currency in 2015 even as falling foreign-exchange reserves fuel speculation the central bank was buying the ringgit to stem losses. Bank Negara Malaysia is discouraging local and global financial institutions from entering into transactions that would result in selling the ringgit, The Star newspaper reported on Friday, citing dealers it didn’t identify.

The Nikkei Malaysia Purchasing Managers’ Index of manufacturing held below 50 for a fourth month in July and a similar Chinese index also signaled a contraction.

“The weak China PMI numbers and lower oil prices are weighing on the ringgit,” said Nizam Idris, the Singapore-based head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd. “It also feels like the central bank is stepping aside and letting the ringgit fall further.”

The ringgit fell 0.6 percent to 3.8485 per dollar as of 1.56pm in Kuala Lumpur, prices from local banks compiled by Bloomberg show. It earlier reached 3.8527, the lowest level since September 1998 when it weakened to 3.9340. Twelve-month non-deliverable forwards dropped 0.8 percent to 4.0083.

As Prime Minister Najib Abdul Razak deals with a corruption scandal linked to state investment company 1MDB, data on Wednesday may show exports shrank in June, as they have for all but one month this year. A report today also showed a Chinese PMI factory gauge was below 50 for a fifth month, showing a further slowing in Malaysia’s second-biggest overseas market.

RinggitForeign-exchange reserves declined to US$100.5 billion (RM384.2 billion) as of the end of July and analysts are predicting they could fall below US$100 billion. The holdings were last below that mark during the 2008 global credit crunch and the 1997-98 Asian financial crisis. The decline is an indication the central bank intervened after the currency breached its 1998 peg level of 3.8 a dollar in July.

Ten-year government bonds dropped for a seventh day, with the yield rising two basis points to 4.09 percent, according to Bursa Malaysia prices. The five-year yield declined four basis points to 3.62 percent.

- Bloomberg