As crude and palm oil prices go down, Malaysia’s ringgit is reportedly dipping close to levels last seen during the Asian Financial Crisis over two decades ago.

Bloomberg today quoted emerging markets strategist Galvin Chia as saying that a potential large outflow of portfolios from Malaysia — coupled with risk-averse investors — could see the ringgit going towards 4.50 versus the dollar.

According to the report, the ringgit’s value is inching closer to 4.5002 versus the dollar, which was last seen in January 1998.

“The likelier determinants of dollar-ringgit movements are portfolio flows, rather than trade,” Chia, who works for NatWest Markets in Singapore, reportedly said.

Last Friday, the ringgit’s value fell to 4.4810 per dollar — the lowest it has been since January 2017.

Bloomberg also quoted Qi Gao, a foreign-exchange strategist at Scotiabank in Singapore, as saying that any further drops in crude oil prices could bring the ringgit down with them.

This is despite the reported increase in Malaysia’s commodity exports this year.

Analysts at Goldman Sachs Group Inc have reportedly speculated that some companies are keeping their export earnings in foreign currencies leading to this disparity.

Source: Malay Mail