The Malaysian Ringgit has now fallen to its lowest level in 25 years, dropping by 0.3% to 4.7635 per the United States Dollar (USD), the weakest since the infamous 1998 Asian Financial Crisis.
As reported by Bloomberg, the Ringgit continued to be weighed down by the dollar’s rise and widening rate differential with the United States.
Furthermore, it’s been a terrible year for the Ringgit, whereby as of today, our currency is the second worst performer in Asia after the Japanese Yen.
The report further elaborated that the latest bout of losses comes as USD gains on haven demand amidst concerns over the ongoing Israel-Hamas conflict.
It also doesn’t help that Malaysia posted its 6th straight months of decline in exports last month which was partly due to a slowdown in China, our nation’s largest trading partner.
Mizuho Bank Ltd Singapore’s head of economics and strategy Vishnu Varathan commented on the Ringgit’s terrible performance, saying that it was due to “real rate spreads that could turn a lot more unfavourable, especially as the subsidy rollback hits inflation and reveals softer real policy rates”.
He added,
“Policymakers face a trade-off between economic headwinds from higher rates or the risk of not responding and endangering macro and Ringgit stability,”
Bank Negara Malaysia’s (BNM) pausing of the interest rate hikes since July is also believed to have added headwinds for the Ringgit as global central banks sound hawkish. This has put the local overnight policy rate at a discount relative to the upper bound of the United States federal funds rate.
So, what do you guys think of the Ringgit’s worsening performance? Share your thoughts with us in the comments.
Also read: Minister Personally Believes Sarawak Should Have Own Currency If Less Favourable Economy Persists
This post first appeared on WORLD OF BUZZ.
