KUALA LUMPUR, Feb 20 — Bank Negara Malaysia (BNM) said today the ringgit’s performance does not reflect the country’s economic strength, as the currency slid further to its lowest level since the 1998 Asian Financial Crisis today.

The ringgit’s recent performance follows similar trends with other regional currencies, the central bank said, which it attributed to external factors like market adjustment to changing US interest rates and uncertainty around China’s economic prospects.

The statement came amid growing polemic over ringgit’s declines, which the Opposition blamed on the ruling coalition’s alleged poor economic management.

"Some of these factors include market adjustment to changing US interest rate expectations, geopolitical concerns and uncertainty surrounding China’s economic prospects,” BNM Governor Datuk Abdul Rasheed Ghaffour said

"BNM is of the view that the current level of the ringgit does not reflect the positive prospects of the Malaysian economy going forward.”

The bank said it expects the ringgit to appreciate this year, citing forecasts of an improving global economy, the government’s commitment to implement structural reforms. and the expected lowering of interest rates in advanced economies.

The ringgit fell 0.3 per cent against the dollar today, the weakest level since 1998 when it dropped to as low as 4.885 against the greenback. Economists have attributed the decline to China’s sluggish growth, which has hurt Malaysia’s exports.

Fourth quarter GDP grew by just 3 per cent as exports continued its decline, contracting by 6.9 per cent, but Abdul Rasheed said exports data have shown steady improvements since the fourth quarter of 2023, registering an 8.7 per cent growth.

The International Monetary Fund (IMF) expects global trade to improve from 0.4 per cent in 2023 to 3.3 per cent in 2024 in its latest forecast.

BNM said it sees the Malaysian economy growing between 4 to 5 per cent this year, driven by the improvement in external demand and strong domestic spending.

The tourism sector has recovered strongly with tourist arrivals in 2024 expected to exceed the pre-pandemic levels of 26 million, the central bank said.

"Investment momentum has picked up with the implementation of approved projects both in the private and public sectors,” it added.