Bank Negara Malaysia (BNM) has maintained that the local currency is currently undervalued. This comes after the ringgit slid to its lowest level in 26 years last week, since the Asian Financial Crisis in the late 1990s, and continues to linger there.

“The ringgit is undervalued. Given Malaysia’s positive economic fundamentals and prospects, the ringgit ought to be traded higher. BNM has stepped up our engagements with government-linked investment companies (GLICs), government-linked companies (GLCs), corporations, and investors to encourage continuous inflows to the foreign exchange market,” said the governor of BNM, Datuk Abdul Rasheed Ghaffour in a statement today.

The governor’s comments followed his response from last week, where he also stressed that the current level of the ringgit does not reflect the positive prospects of the Malaysian economy going forward. At that time, he also said that the ringgit is forecasted to appreciate in 2024 as exports and various other sectors have already shown strong improvements and recovery thus far. The government’s commitment to implement structural reforms and the expected lowering of interest rates in advanced economies, too, are expected to contribute to the ringgit’s appreciation this year.

Meanwhile, the ringgit is trading at 4.779 against the US dollar as of noon today, up slightly from when it reached a low of 4.8 against the greenback last Tuesday. The ringgit’s lowest performance was recorded at 4.88 in January 1998 during the height of the Asian Financial Crisis.

Understandably, many Malaysian businesses are impacted by this development. A Bloomberg report noted that numerous industries – from airlines to raw-material intensive sectors – are particularly at risk. “We have already been feeling the impact as the ringgit has been falling. Now it will be even more severe. Those of us in the services sector that import materials and products will lose even more,” said the national secretary general at the SME Association of Malaysia, Chin Chee Seong.

Prime Minister Datuk Seri Anwar Ibrahim, meanwhile, had stressed that the government is not taking the ringgit’s depreciation lightly. He also requested for the central bank to monitor the situation while the government continues its efforts to improve the situation.  

• TAGS:
• Asian Financial Crisis
• Bank Negara Malaysia
• BNM
• Chin Chee Seong
• Datuk Abdul Rasheed Ghaffour
• Ringgit
• Ringgit Currency
• Ringgit Depreciation
• Ringgit Malaysia
• SME Association of Malaysia