CIMB chairperson and brother of Prime Minister Najib Razak, Nazir Razak observed today that based on the country’s fundamentals alone, the Malaysian ringgit should be trading at 3.70 to the US dollar, instead of 4.10 as it currently stands.
The influential banker said that CIMB’s research analysis had come to this conclusion.
“If our economists are correct, there is about 10 per cent undervaluation of ringgit possibly caused by sentiments,” he said at The Economist‘s South-East Asia Summit in KL today,.
This morning, the ringgit opened at 4.0980/1030, against its trading price of 4.1040/1090 at closing time yesterday.
Nazir also expressed his approval of Najib’s decision to consult the financial community to devise new policy measures.
“I’m pleased that Prime Minister Datuk Seri Najib Tun Razak and the Ministry of Finance are going through the process of engaging the community, particularly analysts and businessmen, to get their perspectives of the economic situation,” he said, as quoted by The Malay Mail Online.
While the Malaysian economy has been battered by external factors such as US and Chinese reserve policy changes, and the dipping price of global oil, the country’s political turmoil and the questions surrounding PM Najib and his handling of sovereign fund 1Malaysia Development Berhad (1MDB) has also contributed to souring foreign investment outlook.
In 2015 alone, almost RM12 billion in foreign investments have been pulled out of the country.
The ringgit is now one of the worst-performing currencies in Asia, hitting lows not seen since the Asian financial crisis of 1998, when Bank Negara had to step in and impose a peg on the note for seven years.
