Ringgit is undervalued, says Bank Negara

The central bank says it has stepped up its engagements with government-linked companies, government-linked investment companies, corporations and investors to encourage continuous inflows to the foreign exchange market.

PETALING JAYA: Bank Negara Malaysia governor Abdul Rasheed Ghaffour today said that the ringgit is being undervalued, following reports that the currency is hitting a 26-year low.

“Given Malaysia’s positive economic fundamentals and prospects, the ringgit ought to be traded higher,” he said in a statement.

Rasheed also said the central bank had stepped up its engagements with government-linked companies, government-linked investment companies, corporations and investors to encourage continuous inflows to the foreign exchange market.

Abdul Rasheed Ghaffour.

Earlier, Bloomberg reported that Malaysian businesses are paying a high price for their country’s weak currency which it said is making importing material and servicing foreign debt more costly.

With the ringgit hitting a 26-year low, industries from airlines to raw material-intensive sectors are particularly at risk, according to S&P Global Ratings.

The ringgit had slid to its lowest level since the Asian financial crisis in the late 1990s and the government had assigned the central bank to closely monitor the currency, Prime Minister Anwar Ibrahim said last Friday.

The local currency last week slipped past 4.8 against the dollar, the weakest level since January 1998, during the height of the Asian financial crisis.