The impact of a weak Malaysian ringgit

THE Malaysian ringgit (MYR) has depreciated above 4.0 against the United States dollar (USD), surpassing the peg level of 3.8 set during 1998's Asian Financial Crisis and taking the ringgit to almost an all-time low.

Fundamentally, Malaysia's Q2 GDP is growing at a healthy rate of 4.9 per cent year on year. Despite this, scepticism over Malaysia's political stability is weighing on the currency and this affects not only Malaysia, but also economies related to it.

Although tourists to Malaysia would be happy with a weak ringgit, this would bode badly for Malaysia's major trade partners. Singapore, being a significant trading partner, would likely be affected the most.