The Malaysian ringgit is down to its lowest level since the 1998 Asian Financial Crisis, with a broad bullish drive on the US dollar hurting the under-pressure currency. In Asian trade on Monday, the ringgit traded against the dollar at 4.4770, its weakest level since collapse of Asia's emerging economies in 1998.
As the rout in the ringgit, which started after the election of Donald Trump as the next US president, continued, the central bank clamped down on currency speculation, ordering foreign banks not to trade the ringgit in the non-deliverable forwards market. The Bank Negara said "prompt supervisory intervention" will be initiated if the norms are violated.
Against the Singapore dollar, the Malaysian currency was trading at 3.0991. Asian currencies have come under pressure after the US Federal Reserve hiked interest rate last week and raised hopes of three rate hikes through the next year.
However, apart from the external factors, the continued oil slump that sent the Malaysian economy into a tailspin and the fall in current account surplus to 13-year lows also contributed to the ringgit's decline.
The protectionist trade practices championed by incoming US president Donald Trump have sent shock waves across the emerging Asian economies that depend on exports. The Malaysian currency is down nearly 7 percent since Trump's election on November 9.
"It's very telling that the ringgit has underperformed the rupiah and even the won, given the domestic difficulties in South Korea now. I think that shows quite clearly that underlying confidence in Malaysia's fundamentals is not strong," Julian Wee, senior markets strategist for Asia at National Australia Bank (NAB), told the Malaysia Chronicle.