Ringgit drops to lowest since peg to US$ was scrapped

SINGAPORE — A decade after Malaysia scrapped the ringgit peg to the United States dollar, the exchange rate is back where it began, just as Prime Minister Najib Razak contests a report alleging the misappropriation of funds.

The currency fell 0.8 per cent to 3.8092 versus the greenback in Kuala Lumpur and has dropped 23 per cent from a 2011 high, as a political debacle surrounding a state investment company exacerbated oil-related losses.

The ringgit hit 2.8189 against the Singapore dollar, the lowest level since 1990, according to Thomson Reuters data.

Former Premier Mahathir Mohamad had fixed the currency at 3.8 from 1998 to 2005 to protect businesses amid the Asian financial crisis, blaming speculators for pushing the ringgit to an unprecedented 4.885 to a dollar.

The peg was scrapped in July 2005 to re-energise the economy and attract foreign investment.

But amid its troubles, the currency has suffered.

The ringgit is Asia’s worst-performing currency this year, eroding returns for investors.

In Singapore, though, the weakening ringgit is good news for Malaysians working here as well as those who plan to cross the border for a holiday or a shopping spree.

Malaysian Tham Yong Seng, 25, who works as an electrical engineer in Singapore, said he planned to take advantage of the low ringgit to send more money home.

He added that he might consider investing in properties in Ipoh or in Penang.

Ms Carroll Tan, a 51-year-old Singapore civil servant who travels to Johor Baru up to three times a year, said she planned to convert more Singapore dollars to ringgit.

“I will change more money, about S$300 to S$500. Some people in my office are changing (money) also,” she said.

“I may also (reconsider) my holiday destination; I can go to other parts of Malaysia, like Penang and Langkawi,” she added.

Yesterday, most money-changers TODAY spoke to reported an increased number of customers buying the ringgit. The going rate was mostly RM2.80 to a Singapore dollar, except a money changer in Tampines, who offered RM2.78 to a Singapore dollar.

But not everyone faced long queues. A money-changer at Collyer Quay said: “People have already changed a lot previously because the rate has been going down. How much more can they change?” Agencies, With additional reporting by Lynette Tan