THE Malaysian ringgit plunged beyond 4 to the U.S. dollar for the first time since 1998 as investors flee the nation’s assets amid a slowing economy and controversy over finances linked to Prime Minister Najib Razak.

    China’s surprise devaluation of the yuan lumped more pressure on the ringgit, Asia’s worst-performing currency in the past 12 months. Vietnam widened the dong’s trading band yesterday, adding to speculation policymakers will reignite a currency war to weaken exchange rates and revive faltering exports. Brent crude has more than halved from a 2014 peak, hurting revenue for oil-exporting Malaysia.

    The ringgit tumbled 1.9 percent to 4.0365 a U.S. dollar as of 1:38 p.m. yesterday in Kuala Lumpur in its biggest loss since 1998, according to prices from local banks compiled by Bloomberg. Malaysia’s benchmark stock index headed for its lowest close since February 2013 and the 10-year government bond yield rose to a seven-month high.

    “China’s yuan move is recalibrating Asian currencies,’ said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. “If the yuan drops another 5 percent to 10 percent, then 4.20 for the ringgit isn’t far-fetched.”

    Najib has come under the spotlight over a 2.6 billion ringgit (US$645 million) donation deposited into his personal bank accounts and which was initially linked to debt-ridden state investment company 1Malaysia Development Bhd. The ringgit has dropped 21 percent in the past year and slumped to a record 4.8850 per dollar during the 1997-98 Asian financial crisis, when former Premier Mahathir Mohamad imposed capital controls and pegged the currency at 3.8.

    A government report last week may show that Malaysia’s second-quarter economic growth slowed to 4.5 percent from 5.6 percent in the previous three months, according to a Bloomberg survey. (SD-Agencies)