Malaysia ringgit plummets 16-year low on political uncertainty

Kuala Lumpur

Malaysia's ringgit hit a 16-year low today on growing political uncertainty following allegations that a probe into a state investment fund found hundreds of millions of dollars were transferred into the prime minister's personal accounts. 

The currency dropped 0.8 percent to 3.8088 against the greenback in Kuala Lumpur, the lowest level since May 1999.

The currency was fixed at 3.8 to the dollar in 1998 during the Asian financial crisis after it slumped 35 per cent the previous year. The peg was dropped in 2005.

Malaysian stocks were also down 1.3 percent, in line with regional markets that have been roiled by the Greek debt negotiation saga.

The Wall Street Journal reported on Friday that government investigators had uncovered nearly $700 million that moved through government agencies, banks and companies linked to state-controlled investment fund 1Malaysia Development Bhd (1MDB).

It said the funds ended up in the accounts of premier Najib Razak, who chairs the advisory board of 1MDB which he launched in 2009. 

Malaysia's attorney general said Saturday that a task force would investigate the allegation, which Najib has dismissed as "political sabotage".

1MDB has said it had never provided any funds to Najib, and the premier has in the past persistently denied any wrongdoing .