M'sians looking at a 'new normal' for ringgit

Kuala Lumpur

MALAYSIANS could well be looking at a "new normal" in their currency, as the ringgit continues to languish, slipping recently to RM3.75 to the US dollar and RM2.80 to the Sing dollar.

Bank Negara governor Zeti Akhtar Aziz maintains that the softness is temporary and that the ringgit is significantly under-valued, given Malaysia's relatively sound economic fundamentals.

But few others see a positive catalyst that could signal a quick recovery for the currency. Macquarie Bank's head of foreign exchange and fixed-income strategy Nizam Idris, a self-described ringgit bear since 2013, said his views have now become consensus. "The ringgit won't rebound quickly," he said.

The forecast US rate hike has been cited as the main reason for the depreciation of the currency, he said, but added that other "specific weaknesses" have also had a hand. Compared to its regional peers, the ringgit has performed the worst against the greenback; it is nearly 7 per cent down in t…