A sustained outflow of foreign funds from the equity and debt markets continued to pile pressure on the weakening ringgit as the local currency fell to a nine-year low against the US dollar.
The ringgit declined 1.4% yesterday to 3.772 versus the greenback.
“In times of exchange rate volatility, the ringgit tends to overshoot,” independent economist Lee Heng Guie told StarBiz. “Though the ringgit is considered to be fundamentally undervalued based on the real effective exchange rate index, weak sentiment would drive the currency to test the 3.80 peg level,” he added.
Lee said the ringgit’s persistent weakness against the US dollar was driven by both fundamental and sentiment factors.
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The ringgit declined 1.4% yesterday to 3.772 versus the greenback.
“In times of exchange rate volatility, the ringgit tends to overshoot,” independent economist Lee Heng Guie told StarBiz. “Though the ringgit is considered to be fundamentally undervalued based on the real effective exchange rate index, weak sentiment would drive the currency to test the 3.80 peg level,” he added.
Lee said the ringgit’s persistent weakness against the US dollar was driven by both fundamental and sentiment factors.
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