KUALA LUMPUR: The drop in value of the ringgit is not because of economic factors, deputy finance minister Datuk Ahmad Maslan said today. Rather, it is because the currency is "grossly undervalued".
He said the government is analysing the factors that may have led to the weaker ringgit, when all other economic indicators are stronger now compared to the economic crisis in 1998. The value of the ringgit to US dollar at that time was RM3.80. Today it is RM3.74 to the dollar.
Inflation was at 5.2 per cent in 1998 compared to 2.1 per cent currently. In 1998, Malaysia's reserves were only RM99.4 billion but today it is RM390.2 billion.
“The economic growth in 1998 was -7.4 per cent but today it is 5.6 per cent. This means the ringgit is grossly undervalued,” Ahmad told the Dewan Negara.
He was responding to Senator Datuk Chin Su Phin, who asked the government to state the impact of continuous drop in national currency on the economy and country as well as the measures taken to ensure that the ringgit remains competitive at global level.