Malaysian ringgit hits 1-year low against Sing dollar; rate cut unlikely on Wednesday

Wednesday's meeting of the Malaysia's central bank's monetary policy committee is in the spotlight.

Asian currencies
Ringitt is the best performer this month with 5% gain and Singapore dollar the second best with 3.6% gain. Reuters

The Malaysian ringgit sank to a 10-month low against the US dollar and a one-year low against the Singapore dollar on Tuesday, even as the Asian currency rout continued.

With the continued slide in ringgit, Wednesday's meeting of the Malaysia's central bank's monetary policy committee is in the spotlight.

The capital flight from Asia in the wake of Donald Trump's victory in the US election had its worst impact on Malaysia, southeast Asia's third largest economy. The ringgit has lost more than 5 percent against the greenback after the election night of November 8.

While the Ringgit was at RM3.1206 against the Singapore dollar, it fell to 4.4327, its weakest since January, against the US currency.

According to a Reuters poll that surveyed 13 economists, the central bank was likely to leave the rate change on Wednesday. A rate cut was expected earlier, but that would put more pressure on the ringgit, analysts say.

The Malaysian central bank banned he trade of ringgit in the non-deliverable forwards market and warned of "prompt supervisory intervention". It has also ordered foreign banks to stop offshore speculation in the ringgit, Reuters reported.

Bank Negara Malaysia (BNM) said last week it was taking measures to curb the volatility in the foreign exchange market. However market observers said this tone of reassurance from the central bank was not enough to stem the currency's slide.

"The question now is we need to see what the BNM can do to stabilize and strengthen the ringgit value against the US dollar. The selling pressure on the ringgit and the downtrend of other emerging currencies continues to happen because the US dollar is steadily strengthening," Mercury Security Sdn Bhd's Head of Research, Edmund Tham, told Bernama news agency.