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Ringgit headed for biggest weekly drop due to oil, 1MDB controversy

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The Malaysian ringgit is headed for its biggest weekly drop in 10 months due to lower crude oil prices and the controversial reports involving state-owned fund 1MDB, reports Bloomberg.

Brent crude suffered a 2.8 percent decline in five days and this has affected the outlook for oil-exporting country's revenues.

Authorities in Singapore and the United States have started moving into forfeiting assets linked to alleged fraud involving 1MDB and this is affecting the currency.

The report stated that this latest episode plaguing 1MDB could contribute to the ringgit's biggest annual drop since 1997.

“The market is now looking at pricing in a higher probability of a rate hike by the Fed this year,” said Irene Cheung, a foreign-exchange strategist in Singapore at Australia & New Zealand Banking Group Ltd.

Oil prices have affected the ringgit and the latest developments on 1MDB may have “an impact on the political front, which we don’t know how it will work out and how serious it is”, she said.

The ringgit, Bloomberg said, fell 0.5 percent today, and 2.8 percent this week, to 4.0608 per dollar as of 10.34am in Kuala Lumpur. The five-day reduction in the value is the biggest since Sept 25, it said.

Yesterday, the US Department of Justice reported that it believed more than US$3.5 billion was misappropriated from 1MDB and approximately US$1 billion were laundered through the country's banking system.

Following that, it has moved to forfeit 17 items including properties, a jet and valuable artwork.

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