PETALING JAYA: The ringgit closed below 3 to the greenback yesterday, breaking a psychological barrier and hitting a level not seen since the dark days of the Asian financial crisis.
The local currency settled at 2.992 to the US dollar, gaining 2.34% since the beginning of the year and charting another multi-year high.
However, exporters need not fear as its rise has been in tandem with the strengthening of other currencies in the region.
Economists told The Star there would be cause for concern only if the ringgit appreciated more than currencies whose exports competed head-to-head against Malaysia's.
Better deal: Money changer Kamaruddin Packiry counting US dollar notes at his shop in Ikano Power Centre at Mutiara Damansara yesterday. — GLENN GUAN / The StarThey said investors were now focusing on emerging economies, including Asia's, given that there was less risk to growth.
They pointed out that the reasons for the better performance of the region's currencies were expectations of tighter monetary policy due to inflation worries, stronger economic fundamentals and robust demand (compared to developed economies).
When compared with other major currencies, the ringgit had generally weakened since the beginning of the year. The ringgit weakened by 4.06% against the pound and fell by 3.07% versus the Aussie dollar and 2% against the Canadian dollar.
Bank Islam Malaysia Bhd chief economist Azrul Azwar said the ringgit's rise should not pose many problems for local exporters as long as it was not out of sync with regional currencies.
He believed Bank Negara would continue to intervene in currency markets to ensure “orderly and gradual” movement of the currency.
Affin Investment Bank Bhd economist Alan Tan said compared with the region's currencies, the greenback's weakness was largely due to concerns over still unclear US data on housing and jobs, as well as signals from the Federal Reserve that monetary policy would continue to remain easy.
Warm Regard, Sara Pandian
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