SINGAPORE: Malayan Banking Bhd (Maybank) president and chief executive Datuk Abdul Farid Alias said the ringgit's true value should be at RM3.30 to the US dollar as present valuations is very much driven by greed and fear in the marketplace.
Abdul Farid said the volatility in the currency markets right now is mostly stoked by volatile liquidity movements in the spot and futures market which has spooked the money markets.
"After taking into account the external variables such as the economies of China, Japan and Europe and domestic variables, the ringgit from an academic fair value should be trading at RM3.30 right now," Abdul Farid told reporters here at its Invest ASEAN conference.
The ringgit closed at RM3.70 to the greenback last Friday, it lowest in one week after US Federal Reserve chair Janet Yellen hinted at a gradual increase in interest rates.
Abdul Farid however said Maybank and Malaysia should be unfazed as the country has been living in an environment of low interest rates for a long time and if there is a hike in interest rates, the country would be adjusted to it over time.
"Central bankers from all over the world adjust the interest rates all the time to manage the economy and inflation level as well as ensure the global economy is on the right equilibrium.
"It will have short term impact on the economy and have long term risk returns but over time, we will get used to the market volatility,” he said.