Ringgit Plunges to 1998 Lows, Hitting RM4.50

The Malaysian ringgit has fallen to its lowest level since the 1998 Asian financial crisis, hitting RM4.50 against the US dollar on Monday. This marks a significant drop from its previous close of RM4.44 and its lowest level since September 1998, when the ringgit plunged to RM4.88 during the height of the crisis.

The ringgit's depreciation has been driven by a number of factors, including the ongoing COVID-19 pandemic, the global economic slowdown, and the US-China trade war. The pandemic has led to a sharp decline in tourism and foreign investment, while the global economic slowdown has reduced demand for Malaysia's exports. The US-China trade war has also created uncertainty for Malaysian businesses, who are concerned about the impact of tariffs and other trade barriers.

The ringgit's weakness is a concern for the Malaysian government, which is trying to stimulate economic growth. A weaker ringgit makes Malaysian exports more competitive, but it also makes imports more expensive. The government is expected to take steps to stabilize the ringgit, including intervening in the foreign exchange market and raising interest rates.

Impact on Businesses and Consumers

The ringgit's depreciation is having a negative impact on Malaysian businesses and consumers. Businesses are facing higher costs for imported goods and services, while consumers are seeing their purchasing power decline. The weaker ringgit is also making it more difficult for Malaysian businesses to compete in the global market.

The ringgit's decline is also expected to have a negative impact on the Malaysian economy. The government has revised its economic growth forecast for 2020 to -5.5% to -8.0%, down from its previous forecast of -0.5% to 0.5%. The weaker ringgit is expected to reduce exports and tourism, while the global economic slowdown is expected to reduce demand for Malaysia's goods and services.

Government Response

The Malaysian government is expected to take steps to stabilize the ringgit, including intervening in the foreign exchange market and raising interest rates. The government may also introduce other measures to support the economy, such as providing fiscal stimulus and increasing infrastructure spending.

The government's response to the ringgit's depreciation will be closely watched by investors and economists. The government's ability to stabilize the ringgit and support the economy will be crucial to Malaysia's economic recovery.

Tables

• Table 1: Ringgit Exchange Rate against the US Dollar

• Table 2: Impact of Ringgit Depreciation on Malaysian Businesses

• Table 3: Impact of Ringgit Depreciation on Malaysian Consumers

• Table 4: Government Response to Ringgit Depreciation

FAQs

• What is the reason for the ringgit's depreciation?

The ringgit's depreciation has been driven by a number of factors, including the ongoing COVID-19 pandemic, the global economic slowdown, and the US-China trade war.

• What is the impact of the ringgit's depreciation on Malaysian businesses?

The ringgit's depreciation is having a negative impact on Malaysian businesses, who are facing higher costs for imported goods and services, reduced competitiveness, and reduced profitability.

• What is the impact of the ringgit's depreciation on Malaysian consumers?

The ringgit's depreciation is having a negative impact on Malaysian consumers, who are seeing their purchasing power decline and their cost of living increase.

• What is the government doing to address the ringgit's depreciation?

The government is expected to take steps to stabilize the ringgit, including intervening in the foreign exchange market and raising interest rates. The government may also introduce other measures to support the economy, such as providing fiscal stimulus and increasing infrastructure spending.

• What is the outlook for the ringgit?

The outlook for the ringgit is uncertain. The ringgit is likely to remain under pressure in the near term, but it may strengthen if the COVID-19 pandemic is brought under control and the global economy recovers.

• What should businesses and consumers do in response to the ringgit's depreciation?

Businesses should consider hedging against currency risk and diversifying their supply chains. Consumers should be mindful of their spending and consider saving in a currency other than the ringgit.

• What are the long-term implications of the ringgit's depreciation?

The long-term implications of the ringgit's depreciation are unclear. The ringgit's depreciation could lead to higher inflation and a slowdown in economic growth. However, the government's response to the ringgit's depreciation could mitigate these negative effects.

• What are the opportunities created by the ringgit's depreciation?

The ringgit's depreciation could create opportunities for Malaysian exporters, who could benefit from the lower cost of their products in foreign markets. The weaker ringgit could also make Malaysia a more attractive destination for foreign investment.