The Malaysian Ringgit fell 0.36% to 3.6983 against the US dollar on Thursday, ending up as the fourth-worst performer of the day in the region.
The deepening sell-off in the global bond market has resulted in the depreciation of the Ringgit, along with other Asian currencies, as investors reassess their positions in emerging markets.
The Ringgit hit an all-time high of 4.7125 against the US dollar on September 1, 1998 at the height of the 1997/98 Asian financial crisis. International rating agencies had been partly blamed for the Ringgit’s plunge after they unanimously downgraded the country’s credit ratings during the crisis.
Concerns of such risks re-emerged after Fitch Ratings Agency warned that it was “more likely than not” to downgrade Malaysia’s sovereign rating on January 2.
This followed the Malaysian Government’s revision of its 2015 fiscal deficit target to 3.2% from 3% of GDP, as well as the reduction of the country’s GDP growth forecast to between 4.5% and 5.5% from 5% to 6%.
The rating agency issued another statement on March 17, saying that there was more than a 50% chance of a downgrade.
Fitch currently has an A- rating on Malaysia’s sovereign credit with a negative outlook. The rating agency had downgraded the outlook to “negative” from “stable” in July 2013.
