The ringgit touched a 52 week low against the US dollar at 3.3567 on Monday, January 27 and the erosion of value of currencies across the globe was a major concern for investors.
One of the worst hit currencies was the Argentinian peso which has depreciated by 15 per cent against the US dollar year to date. The Turkish lira, the Russian rouble and the Indian rupee all witnessed currency declines against the US dollar while the South African rand sank to a 5 year low against the greenback.
According to the Financial Times (FT) , two main reasons cited for the decline in global currencies was the effects of the Federal Reserve’s tapering of its bond buying programme and China facing slower growth in 2014.
The ringgit depreciated against the Singapore dollar to 2.6040/6082 from 2.5969/6000 and eased against the yen to 3.2327/2369 from 3.1903/1944 . It fell against the British pound to 5.5378/5441 from 5.5321/5384 and weakened against the euro to 4.5531/5579 from 4.5395/5442.
HSBC in a foreign exchange report for its outlook on currencies for 2014 said that it expected the ringgit to face headwinds from “ various fronts,” current account surplus, high foreign exposure in local debt market, threat of higher inflation and elevated fiscal burden.
“Bank Negara Malaysia was among the least interventionist of central banks in Asia and we expect the ringgit to be volatile with a depreciation bias,” said HSBC in the report.
HSBC’s year end target for the ringgit of RM3.33 has been breached and the banking group has not revised its target.
Malaysia weakening current account surplus and high foreign holding of government debt at 37.4 per cent of total outstanding debt was a major cause for concern.
While a weaker ringgit, was positive for exporters it would be negative for importers and would be detrimental for the average Malaysian as Malaysia depends heavily on imported food. Malaysians planning to travel overseas would probably have to spend more for their travels.
Malaysia GDP is poised to grow by 5 to 5.5 per cent for 2014 but persistent weakness in the Ringgit may cast doubts on this growth especially if real interest rates turn negative.
A negative real interest rate environment occurs when the inflation rate exceeds interest rates.
In November 2013, the Consumer Price Index (CPI) was at 3.2 per cent and if inflation continues to creep upwards the possibility of Malaysia being in negative real interest rate environment is not too remote.
Ranjit Singh
Mon Jan 27 2014
Who is Prabowo Subianto, incoming president of Indonesia?
A wealthy ex-general with ties to Indonesia's popular outgoing president and its dictatorial past, looks set to be its next leader.
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.