KUCHING: Malaysian ringgit breached the four ringgit mark against the US dollar hitting a low of RM4.0030 to the dollar last night amidst poor market sentiments and concerns on political instability.
According to Bloomberg statistics, the ringgit closed at 3.9735 against the dollar at 5pm yesterday.
A local dealer said the persistent weakness in the ringgit is not beneficial at all for the equity market.
“We would get pretty worried once foreigners start disposing off Malaysia government bonds which could cascade down perverse effects for both currency and equity markets,” he told The Borneo Post on condition of anonymity.
“We reckon the ongoing political situation in the country will deter foreigners from investing in this region and may in fact convince foreign investors to shift assets away from Malaysia given the political instability.
“We anticipate once the political dust settle in the country, then we could see sentiment start to improve among the international community with regards to Malaysia being a viable investment prospect in the region.”
The dealer went on to note that Malaysia’s economy is not only mired by negative political sentiment, but structurally weak economy on the backdrop of low energy prices.
“If this situation persists, we most likely will see lower growth in quarter to come,” the dealer added.
However, in spite of negative sentiments, there was a “glimmer of positive news” which one could rely on.
“The weakening currency will prove beneficial for exports which contribute a major role to Malaysia’s economy,” he added.
Read more: http://www.theborneopost.com/2015/08/12/ringgit-breaches-rm4-mark-against-us-dollar-amid-negative-sentiments/#ixzz3iXMoTQh1
