The Malaysian ringgit dropped 0.3% to roughly 4.8 versus the US dollar during trading on Tuesday, marking the lowest level since January 1998 amid the Asian financial crisis.
The weak export performance and increasing US interest rates have contributed to the currency’s more than 4% decline so far this year.
The Singdollar traded at RM3.571 on February 20 at 10:00 p.m.
Since January 1, the ringgit has declined by 2.6% against the Singapore dollar. The ringgit has fallen more than 37% in just the last ten years from the time that one Singapore dollar was worth RM2.60.
The governor of Malaysia’s central bank (Bank Negara), Datuk Abdul Rasheed Ghaffour, said on Tuesday that “external factors” including US interest rate hikes, geopolitical concerns, and uncertainties about China’s economic prospects had an impact on the currency’s performance.
“The current level of the ringgit does not reflect the positive prospects of the Malaysian economy going forward,” he said in a statement.
According to him, the anticipated rise in international trade and Malaysian exports will help the currency this year.
Malaysia’s Economic Outlook: Growth Prospects Amidst Ringgit Concerns
Malaysia’s economy grew at a slower pace in 2023, averaging 3.7%, falling short of the central bank’s expectation of 4% due to weak export performance.
This year, Bank Negara anticipates improved growth. It stated that growth in 2024 would be between 4 and 5 percent due to the expected rebound in external demand and solid domestic spending.
According to Abdul Rasheed’s comments, Malaysia’s growth this year will be driven by robust domestic expenditure and a recovery in external demand.
He said that since the fourth quarter of 2023, Malaysia’s exports have improved “steadily,” and he added that the IMF had forecast that trade would increase later this year.
According to data released by Malaysia’s statistics agency on Tuesday, the nation’s exports increased by 8.7% year over year in January, ending a run of ten consecutive months of decline.
Additionally, Abdul Rasheed said that after the conclusion of the Covid-19 epidemic, the tourism industry has recovered strongly and that, in 2024, visitor numbers will probably exceed the 26 million pre-pandemic levels.
Regarding investment, he stated that there has been more activity recently because authorized projects in both the private and public sectors are being carried out.
“Most analysts are forecasting for the ringgit to appreciate this year, reflecting these positive developments and the government’s commitment to implement structural reforms and anticipated lowering of interest rates in advanced economies,” he said.
Due to growing cost pressures, the declining ringgit has upset a lot of Malaysian wage earners and entrepreneurs.
In a recent poll conducted by the Malaysian branch of the Associated Chinese Chambers of Commerce and Industry, more than half of the 684 participants reported that the depreciating currency was reducing their revenues.
