Malaysian ringgit at lowest level in decades

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Malaysia Money exchangeThe ringgit weakened the most last week in Asia against the US dollar, reaching a level it last saw in two decades, ending trade at 3.9232 on August 7. It was the weakest rate since September 2, 1998, the day before the government pegged it at 3.8000 per dollar to put a floor under the currency during the Asian financial crisis. Malaysia lifted the peg in 2005.

As a result of a 12.2 per cent plunge of the ringgit this year alone, Malaysia’s foreign-exchange reserves dropped to the lowest level since the 2008 global credit crunch, totaling $96.7 billion as of July 31, the central bank said, down 3.8 per cent from July 15 when reserves stood at $100.5 billion.

The holdings are sufficient to finance 7.6 months of retained imports and are 1.1 times the country’s short-term external debt, Bank Negara Malaysia said in a statement on August 7. Furthermore, foreign exchange reserves have fallen by almost $15 billion over the last six months and a half months. The pace of this deterioration of Malaysia’s foreign reserves is unsustainable, analysts say.

Caution increased over possible intervention by the central bank to bolster Asia’s worst-performing currency this year. The ringgit has been further hurt by uncertainty about the future of Prime Minister Najib Razak amid corruption allegations circling an indebted state fund, 1MDB.
However, notall is gloomy in Malaysia due to the weak ringgit. Tourism-related businesses as well as the property sector are enjoying robust business from Singapore, where people are taking advantage to buy properties in Iskandar Malaysia, giving the property market a “marginal boost”, according to real estate agents. Projects in downtown Kuala Lumpur were also snapped up by foreign investors who felt that this was an opportune time to enter the market.

The rapidly falling ringgit has also been a lucrative bet for currency traders since its decline began last month. A notional bet of $10 million that the ringgit would weaken over a month placed in July would have earned close to $300,000.

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Reading Time: 2 minutes

The ringgit weakened the most last week in Asia against the US dollar, reaching a level it last saw in two decades, ending trade at 3.9232 on August 7. It was the weakest rate since September 2, 1998, the day before the government pegged it at 3.8000 per dollar to put a floor under the currency during the Asian financial crisis. Malaysia lifted the peg in 2005.

Reading Time: 2 minutes

Malaysia Money exchangeThe ringgit weakened the most last week in Asia against the US dollar, reaching a level it last saw in two decades, ending trade at 3.9232 on August 7. It was the weakest rate since September 2, 1998, the day before the government pegged it at 3.8000 per dollar to put a floor under the currency during the Asian financial crisis. Malaysia lifted the peg in 2005.

As a result of a 12.2 per cent plunge of the ringgit this year alone, Malaysia’s foreign-exchange reserves dropped to the lowest level since the 2008 global credit crunch, totaling $96.7 billion as of July 31, the central bank said, down 3.8 per cent from July 15 when reserves stood at $100.5 billion.

The holdings are sufficient to finance 7.6 months of retained imports and are 1.1 times the country’s short-term external debt, Bank Negara Malaysia said in a statement on August 7. Furthermore, foreign exchange reserves have fallen by almost $15 billion over the last six months and a half months. The pace of this deterioration of Malaysia’s foreign reserves is unsustainable, analysts say.

Caution increased over possible intervention by the central bank to bolster Asia’s worst-performing currency this year. The ringgit has been further hurt by uncertainty about the future of Prime Minister Najib Razak amid corruption allegations circling an indebted state fund, 1MDB.
However, notall is gloomy in Malaysia due to the weak ringgit. Tourism-related businesses as well as the property sector are enjoying robust business from Singapore, where people are taking advantage to buy properties in Iskandar Malaysia, giving the property market a “marginal boost”, according to real estate agents. Projects in downtown Kuala Lumpur were also snapped up by foreign investors who felt that this was an opportune time to enter the market.

The rapidly falling ringgit has also been a lucrative bet for currency traders since its decline began last month. A notional bet of $10 million that the ringgit would weaken over a month placed in July would have earned close to $300,000.

USDMYR

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