KINIBIZ Over the past year, the Malaysian ringgit has hit many unfortunate milestones. On Aug 12, 2015, it dropped below RM4 versus the US dollar for the first time since 1998 during the Asian Financial Crisis when the ringgit hit an all-time low of 4.885 to the US dollar.
The ringgit has been one of the worst hit currencies against the US dollar and at times this year it has been the worst performer against the greenback in Asia. Year to date, the local note has depreciated about 25 percent against the greenback.
Now with the US Federal Reserve (the Fed) raised rates during their Dec 15-16 meeting, there are concerns that the ringgit might weaken even further and in a worst-case scenario even cross the RM5 to the US dollar mark going into next year.
Nonetheless, Bank Negara Malaysia (BNM) governor Zeti Akhtar Aziz has repeatedly said that at its current levels the local note is significantly undervalued, attributing its weakness to primarily external factors and also to domestic uncertainties.
At a press conference in conjunction with the third quarter of 2015 (3Q15) result, the governor said that at its current levels the ringgit “does not reflect the country’s fundamentals as the current account remains in surplus, unemployment remains low and inflation is within Malaysia’s long-term average”.
According to the governor, “The exchange rate movement is due to a number of external factors as well as some domestic factors”.
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