KUALA LUMPUR (Jan 12): The Malaysian currency has once again exploded into unprecedented weakness, with the ringgit getting underway to a nightmare start in 2016, according to FXTM chief market analyst Jameel Hamid.

FXTM is an international foreign exchange broker.

In a market analysis Jan 11, Hamid said the revision of Malaysia’s credit-rating from Moody’s is not going to help the potential for a reversal of momentum and that is even if these escalated fears over the China economy subside for the remainder of the week.

He said speculators are probably going to heighten calls for the Bank Negara Malaysia to intervene and protect the currency from further losses, but what the markets need to understand is that the central bank simply does not have the reserves to be regularly doing this and it would once again only have a short-term impact on the currency.

“These are quite simply external factors that have returned to hurt the currency, and they have returned at an even more intense level than before with expectations being strong that China’s GDP growth will fall to a lowly-6% and that the price of commodities such as oil will drop to new milestone lows,” he said.

Hamid said there are also going to domestic concerns that the advantages which the astonishing currency weakness was having on export figures are subsiding after the trade data late last week, and that low global trade could present a risk to further trade balance releases.

“If Bank Negara or other policymakers in Malaysia are truly concerned about prolonged currency weakness, then the option to raise interest rates is a path which they can take to protect the currency from further losses,” he said.