KUALA LUMPUR (Sept 7): The ringgit fell further against the US dollar to its lowest point since February 1998 at 4.3103 in the early trades today, amidst the greenback strength against Asia Ex-Japan (AXJs) and oil price weakness.

The increase in five year credit default swap (CDS) and weakening of macroeconomic data also dragged down the local currencies.

This morning, the local currency opened at 4.2600 against the US dollar. It had retreated to a low of 4.3103, before paring losses to value at 4.3025 against the US dollar as at 10.17am.

This is in comparison to its strongest level against the greenback recorded at 2.9390 on July 27, 2011.

The ringgit registered its historical low against the US dollar of 4.7125 on Jan 9, 1998, during the Asian financial crisis.

In comparison, the Singapore Dollar (SGD) also strengthened against ringgit to hit its all time high of 3.0236. At 10.41am, the SGD was quoted at 3.0218 against ringgit.

The weakening of oil price did not augur well on ringgit, as oil is one of Malaysia's main exports. At the point of writing, the Brent Crude Oil was down 0.65% at US$49.29 per barrel, while the US Crude fell 0.74% to US$45.71 per barrel.

In a research note today,  Maybank GM Research reiterated that ringgit at current levels is not a reflection of fundamentals and that the weakness is expected to be temporary.

"Malaysia’s economic fundamentals remain intact. Its 2015 growth is still expected to come in at 4.9%; current account to Gross Domestic Product (GDP) remains in surplus," it added.

The immediate next resistance stood at 4.3370, while support remained at 4.2600, Maybank GM Research said.

Meanwhile, AmBank FX Research said the ringgit fell 1.58% against US dollar, reversing its weekly gains position of last week to be top loser among Asian currencies.

"The Purchasing Managers' Index (PMI) for manufacturing sector declined sharply to a 34-month low of 47.2 in August, from 47.7 previously.

"Exports grew 3.5% in July, softer compared to 5% in June, which translated in lower trade surplus of RM2.38 billion against previous reading of RM7.98 billion, another downward pressure to fear to declining foreign exchange reserves," it added.

The firm said the one month USD/MYR volatility however, is holding steadily, despite local equity markets having dipped below critical 1,600 level.

"MSCI Malaysia price-to-book is only 12-13% above the Global Financial Crisis (GFC) low. This is the lowest that the MSCI Malaysia has hit, since the global financial crisis," it added.

Last Friday (Sept 4), Bank Negara Malaysia (BNM) said its international reserves amounted to US$94.7 billion (RM357.7 billion) as at end-August 2015, down 2% or US$2 billion month-on-month to its lowest since July 2010.

While the figure reflects a third straight month of decline totaling US$11.7 billion, the end-August reserves position is US$200 million higher than the US$94.5 billion (RM356.4 billion) as at mid-August.
 
The reserves are sufficient to finance 7.4 months of retained imports and is 1.0 times short-term external debt, the central bank said.