The Malaysian ringgit decline is showing no signs of slowing down, falling to 4.7635 per dollar; the lowest it’s been since the 1998 Asian Financial Crisis.
The ringgit’s value dropped by 0.3% from Wednesday, which also makes it the worst performer in Asia, behind only the Japanese yen.
According to The Edge, this latest drop is caused by the rise of the U.S dollar’s value as a safe haven due to concern over growing tensions in the Middle East. Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid stated his concerns over the impact the Israel-Hamas conflict will have on the currency market.
“The US president’s unequivocal support for Israel could potentially prolong the conflict; under such circumstances, the dollar is likely to be the main beneficiary, given its safe haven status,” said Dr Mohd Afzanizam.
The situation has also been exacerbated by the decline in exports. Partly due to a reduction in trading with China, Malaysia’s largest trading partner.
A third reason provided for the ringgit’s struggle to recover is due to the decision of Malaysia’s central bank, Bank Negara Malaysia to not exercise interest-rate hikes.
Although the ringgit’s performance has stayed steady against the Singaporean dollar since last Wednesday, trading at 3.4679 per dollar, it still depreciated against most major currencies except the British pound, where the ringgit’s performance strengthened 5.7809 per pound from 5.7869 per pound on Wednesday.
