Asian currencies were broadly stable on Wednesday as China's monetary stimulus injected some calm into tense markets, but not the ringgit.
The Malaysian currency nosedived nearly 2 percent against the greenback in late morning trade to seventeen-year low for the fourth day running , unable to get any relief from China's interest rate and reserve requirement cuts that stabilized other emerging market currencies on Wednesday.
Fresh developments regarding state investor fund 1Malaysia Development Berhad's (1MDB) saga were to blame for Wednesday's plunge. Abu Dhabi's International Petroleum Investment Co (IPIC) is reportedly considering exiting a plan to help restructure 1MDB's debts, Singapore's Business Times reported earlier in the day.
1MDB, known for its investments in Malaysian power assets, is wholly owned by the government, which makes Prime Minister Najib Razak's administration responsible in the case of a default.
In May, IPIC signed an agreement to inject $1 billion into 1MDB to help pay off a $975 million loan to a syndicate of international lenders due in September. The agreement was hailed by Kuala Lumpur as a momentous step towards reducing 1MDB's total $11.6 billion debt overhang and advancing the fund's long-awaited restructuring plans that are due to be implemented early next year.
In a statement on Wednesday, 1MDB denied that the binding agreement with IPIC was off, adding that it remains in discussions to conclude the [$1 billion] transaction. That saw the ringgit pare losses to around 0.7 percent but still trade below the key 4.3 level per dollar.