Malaysian ringgit at lowest level in decades
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.
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.
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.
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. 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...
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.
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.
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.
