The Ringgit currency hit a six-year low against the US dollar last week, amid concerns over possible rating downgrades of Malaysia’s debts. This came after the Government revised its fiscal deficit forecast from 3% to 3.2% at its budget revision announcement.
The initial Budget 2015 was tabled late last year with a projected expenditure of RM273.9bil against an expected revenue of RM235.2bil. It was based on global oil prices of US$100-US$105 per barrel. However, the recent oil slump has caused prices to fall as low as US$50 a barrel. The revised budget is now based on global oil price of US$55 per barrel.
Fitch Ratings warned that it is “more likely than not” to downgrade Malaysia’s sovereign rating at its upcoming review in the first half of the year. However, Datuk Seri Najib Tun Razak had said at the budget revision announcement that we are not in the same crisis situation as in 1997 and 1998, or 2009, where stimulus packages were needed.
The ringgit has depreciated 10% over the past three months, as it settled at 3.6172 against the US dollar on last Tuesday.