KUALA LUMPUR: The ringgit traded at its weakest in eight months against the US dollar yesterday at 3.33, with other Asian currencies also falling as the greenback strengthens, according to Bloomberg data.
The Singapore dollar was down to a one-year low of 1.2916 against the dollar, as the Philippine peso hit a 10-month low of 45.085, while Indonesia’s rupiah hit an 11-month low of 12,260. The Thai baht was at an eight-month low of 33.07 against the dollar, while the Korean won was at a three- month low of 1,083.74.
The Japanese yen was the hardest hit, sliding to a seven-year low yesterday at 114.21 against the dollar, said Reuters.
It is reported that the strengthening of the dollar is in anticipation of the US Federal Reserve raising interest rates, which has prompted demand and fund flows for US-based assets, and consequently the US dollar.
A Reuters report said the ringgit’s low against the dollar is also attributed to worries about lower oil prices hurting the country’s economic fundamentals.
The report said the ringgit had recovered some of its losses, with Bank Negara Malaysia (BNM) suspected of having intervened to support the currency.
An economist told theedgemarkets.com that how far the ringgit will fall is dependent on the level that BNM will allow the currency to stretch without intervening.
“A weaker ringgit enhances export competitiveness but at the same time import costs go up. So it will all depend on what is BNM’s [tolerance] level for the ringgit before deciding to intervene in the currency market,” said an economist.
Hong Leong IB Research said the ringgit is expected to remain weak from 3.25 to 3.35 per US dollar on more moderate growth outlook, a narrowing of the current account surplus and a pause in the overnight policy rate hike.
This article first appeared in The Edge Financial Daily, on November 5, 2014.