KUALA LUMPUR (Nov 17): The ringgit's current value against the US dollar is not reflective of Malaysia's economic fundamentals, said Bank Negara Malaysia governor Datuk Shaik Abdul Rasheed Abdul Ghaffour, adding that the persistently strong greenback is not expected to derail Malaysia’s growth prospects.
“The currency movement reflects various factors, sometimes beyond the underlying strength. However, in the long run, we believe that it [ringgit] will reflect the underlying fundamentals," Abdul Rasheed told reporters at a briefing on Malaysia's third-quarter (3Q2023) gross domestic product (GDP) on Friday.
“Malaysia’s economy today is resilient notably in terms of our economic fundamentals, robustness of our financial sector, and depth of our financial markets.
“Going forward, global financial market uncertainties are expected to ease — barring any new adverse developments such as heightening geopolitical tensions — as financial markets expect the US policy rate to be reduced next year. This should ease US dollar strength and thus reduce depreciation pressure on the ringgit,” he added.
BNM said the ringgit depreciated against the US dollar in 3Q2023 as the greenback strengthened on US interest rate hikes.
“This trend was also observed among other regional currencies, due primarily to external factors including the US monetary policy path,' he said.
At the time of writing, the local currency was trading at 4.6855 against the US dollar, and 3.4764 against the Singapore dollar.
Year to date, the ringgit had depreciated about 6% against the US dollar, while it weakened 5.5% against the Singapore dollar.