MALAYSIA’S central bank on Tuesday (Feb 27) said that the ringgit, which briefly hit a 26-year-low last week, is undervalued and should be trading higher on account of the country’s positive economic fundamentals and prospects.
Bank Negara Malaysia governor Abdul Rasheed Ghaffour said the central bank had stepped up engagements with government-linked investment companies, government-linked companies, corporations and investors to encourage continuous inflows to the foreign exchange market.
“Given Malaysia’s positive economic fundamentals and prospects, the ringgit ought to be traded higher,” he said
The ringgit is trading near lows last seen in January 1998, at the height of the Asian financial crisis, when it reached 4.885 against the US dollar. The ringgit had strengthened slightly to 4.777 against the greenback on Tuesday morning.
The currency has slumped 4 per cent against the US dollar so far this year, extending its poor performance in recent years.
Bank Negara said last week that the ringgit’s recent performance was largely due to external factors, and did not reflect the positive prospects of Malaysia’s economy.
Abdul Rasheed said that given improving exports, a recovery in tourism, an increase in investments and the government’s commitment to structural reform, most analysts were forecasting the ringgit to appreciate this year.
Malaysian Prime Minister Anwar Ibrahim on Friday said that while the ringgit’s fluctuation was concerning, the country’s strong fundamentals underpinned a promising outlook for the economy.
Anwar said Malaysia’s growth could be sustained, as investments were high while inflation and unemployment, down.
He added that the ringgit’s current performance should not be compared to 1998, when the nation’s inflation and joblessness rates were high and foreign investors stayed away. REUTERS
