Malaysian Ringgit Plunges: Businesses Struggle Amid Economic Turmoil
In the face of the Malaysian ringgit’s alarming plunge to its lowest point in 26 years, businesses across the nation are grappling with the harsh reality of increased costs for imports and foreign debt servicing. The once-stable currency has reached levels unseen since the late 1990s Asian financial crisis. Many Malaysians are concerns and requesting calls for urgent action.
According to S&P Global Ratings, industries heavily reliant on imported materials and foreign debt, ranging from airlines to raw material-intensive sectors, are bearing the brunt of the ringgit’s depreciation. The situation has been exacerbated by the currency’s recent slide. The ringgit slipped past 4.8 against the US dollar, reminiscent of the Asian financial crisis era.
Prime Minister Anwar Ibrahim, addressed the nation on February 23, acknowledged the severity of the situation. He revealed that the government has tasked the central bank with closely monitoring the currency. However, the response from Bank Negara Malaysia’s (BNM) governor, Abdul Rasheed Ghaffour, has been lackluster. The BNM governor merely reassured the nation by emphasizing the nation’s positive economic fundamentals and prospects.
Ringgit continues to decline
Despite these assertions, the ringgit’s decline continues, raising concerns among businesses and citizens alike. The sentiment is particularly critical as industries with significant dollar-denominated expenses, such as airlines and construction firms, face heightened financial strain. Malaysia Airlines and AirAsia, for instance, are grappling with the challenge of operating and servicing debts amidst the currency’s depreciation.
State-owned oil and gas company Petronas stand to benefit from the weak ringgit due to their dollar-centric operations. However, others are feeling the pinch. Axiata Group, Malaysia’s largest wireless carrier, is among those with substantial dollar debt. This raises concerns about escalating servicing costs.
PM Anwar Ibrahim was finance minister in 1998 and now
Amidst the economic turmoil, discontent simmers among the populace. Many netizens direct blame towards PM Anwar Ibrahim and Economic Minister Rafizi Ramli. The latter’s previous assertions regarding the ringgit’s performance have come under scrutiny. These comments reflect broader frustrations with the government’s handling of the currency’s decline. Some netizen’s have even drawn parallel’s between the current situation and the 1998 ringgit crisis. Some have pointed out that PM Anwar Ibrahim was the finance minister then and now.
As Malaysia grapples with the repercussions of the ringgit’s downward spiral, urgent measures are required to stabilize the currency and alleviate the burdens faced by businesses and citizens alike. Only through concerted efforts and prudent policies can the nation navigate through these turbulent economic waters and emerge stronger on the other side.