Ringgit decline not surprising, says economist

Dr Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital Investors, said other commodity currencies, like the Australian dollar, were also falling.

"This is a good thing as it will promote Malaysia’s international competitiveness which will help reduce imports and boost export volumes thus helping to offset the decline in commodity-related earnings," he told Bernama.

On the falling ringgit, Oliver said, it was hard to see a sustained rebound until commodity prices turned back up and that might be some years away.

Following a global slump in commodity prices, the local currency hit a 17-year low today. It declined 0.1 per cent to 3.811 per US dollar, its weakest since September 1998.

Also today, the Australian dollar fell below the S$1 level against Singapore dollar level for the first time since 2009.

The currency was traded at around 99.9 Singapore cents compared with just above S$1.00 on Friday.

Oliver said the A$ was being driven lower by a combination of a stronger US currency, a secular downtrend in commodity prices and a narrowing in the interest rate. "It is likely to fall to around US$0.70 by year-end and then into the US$0.60s as part of an overshoot on the downside to make up for the damage done by the strong A$ years," he said. He said the downtrend in the A$ would help the Australian economy and share market.