PETALING JAYA: Financial analysts and economists have expressed concern over the fall of the ringgit, which traded at RM4.29 to the US dollar at the close of business yesterday.
They said the ringgit is undervalued due to the expectation that the US Federal Reserve (Fed) would hasten its interest hike to curb inflation.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid predicted that the ringgit would continue to fluctuate in a narrow range as market players await the Fed’s next move at its meeting next month.
He said policy rates enforced by other central banks, including the Bank of England and Bank of Canada, were among factors that led to such fluctuation, adding that the European Central Bank would soon follow suit.
“The ringgit is certainly undervalued as we look at the Nominal Effective Exchange Rate and Real Effective Exchange Rate. Both indices are hovering below the 100 point level.
“There are market sentiments that are constantly changing and at the moment, issues revolving around higher interest rates in more advanced countries have been the main focus. Chief among them is the Fed, which is likely to be aggressive in raising the Federal Fund Rate at its May meeting.”
Consumers Association of Penang senior education officer N.V. Subbarow said the people’s purchasing power to maintain their lifestyles was being tested by the lower-valued currency.
“Everything is so expensive. Poor families, including parents who have more than four children, are unable to buy fish or chicken to cook. I went to a wet market yesterday and met many consumers who were unhappy as they left the market.”
Subbarow said RM50 was previously enough to buy food for a week. But now, one needs at least RM100. This means that in a month, each family needs about RM500 to buy vegetables, fish and other cooking essentials, including rice, oil, flour and grain.
“The hike in prices is giving a big headache to poor families as in many houses, people are not happy with their food because they can’t buy what they want. Many parents are upset that despite working so hard, they are still unable to buy healthy food for their children.
“Some families skip breakfast to eat lunch because they cannot afford to spend money on food three times a day,” he added.