Ringgit hits new low of RM4.419 against US$

KUALA LUMPUR: The ringgit closed yesterday at RM4.4190 per US dollar, down 0.55 per cent, to a new low for the year.

Although some analysts said it was due to market reaction to the recent Bank Negara Malaysia directives, which was considered a form of capital control, others figured it was more because of real fundamentals.

BI Economic Analysis said Bank Negara had room to cut interest rates at the next Monetary Policy Committee meeting on November 23.

In July, the new Bank Negara governor already cut the Overnight Policy Rate, the first time in eight years.

Although Malaysia’s gross domestic product grew 4.3 per cent in the third quarter (Q3) from four per cent in the second quarter (Q2), exports fell 1.3 per cent in Q3, compared with a growth of one per cent in Q2.

Meanwhile, private consumption was robust at 6.4 per cent in Q3 due to high wages and higher disposable income, said BI Economic Analysis.

“Ringgit now is a dollar-denominated story,” said ANZ Bank New Zealand in a client note, reported Bloomberg.

This, coupled with the United States Federal Reserve (Fed) chairman Janet Yellen’s recent signal of an interest rates hike at the US Federal Open Market Committee meeting on December 13, were causing downward pressure on the market, said analysts.

In her first public statement since the US election, Yellen told lawmakers that the Fed was close to boosting borrowing costs as the economy continued to gain traction.

However, Malaysia is not the only country in this region which is facing a slide in exports.

Singapore’s non-oil exports dropped 4.8 per cent in September compared to last year, and analysts are saying that Singapore might even slip into recession.