It is fashionable in this era of financial crisis to see one country's currency stronger, and this has become somewhat populist, especially at a time of election fever.
If politicians come into power with their own idea of a stronger ringgit while remaining disconnected from the real issue of a weaker ringgit vis-à-vis a stronger ringgit, the country will go down the drain.
In economics, as opposed to depreciation of currency, we've got to be very careful when there is a sudden 20 per cent decline in the ringgit. This is because that will be as good as a devaluation of the currency that could lead to imported inflation for countries that are substantial importers.
One other thing politicians clamouring for a stronger ringgit got wrong is the slant of the story on the weaker ringgit. It is not that the ringgit is weakening against all other currencies, but rather mainly against the US dollar, the reserve currency of the world.
And the United States, like the European Union, is in a Catch-22 situation. The massive sanctions imposed on Russia not only harm Russia, but also trigger an unprecedented spike in energy and food prices, resulting in galloping inflation not seen in many years.
This high inflation can only be tamed with higher interest rates, and the US Federal Reserve (the Fed) is very focused on sticking to aggressive rate hikes as inflation stays hot.
The Fed is expected to deliver a third straight 75-basis point interest rate hike this week, if not more, after a US government report showed that consumer prices did not ease as expected last month and price pressures appeared to broaden.
With aggressive rate hikes, the US dollar is bound to appreciate again against all currencies in the coming days and weeks, although the US is aware such aggressive policies could result in the country going through a recession. This will be contagious and spread to the rest of the world.
However, this is another Catch-22 situation that will play out much later, and it will be interesting to see when the US will stop these aggressive rate hikes to avoid a recession.
Thus, we can clearly see that as the ringgit weakens against the US dollar, the reality is also that almost all major currencies are undergoing depreciation against the US dollar, including the mighty euro.
Nevertheless, certain quarters will still bring up the issue of whether Malaysia is the worst affected country in terms of currency depreciation against the US dollar.
As pointed out by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, while the ringgit has depreciated by 7.5 per cent against the greenback since early this year, many other currencies in the region and developed countries have also fallen against the dollar.
Malaysia is actually doing well compared with Japan, the United Kingdom and EU, as the slide in the ringgit is the lowest compared with the slides in the currencies of these three countries.
Also, the ringgit has strengthened against the currencies of Malaysia's other trading partners such as Japan, the UK, the EU, New Zealand and South Korea.
Additionally, economic fundamentals that have continued to strengthen are important in determining the robustness of the ringgit.
These include gross domestic product growth on the rise for every quarter beginning with the last quarter of 2021, an unemployment rate of 3.7 per cent in July 2022 being the lowest since the pandemic hit the country, a robust rise in the Industrial Production Index, the wholesale and retail trade and export figures.
The country's inflation rate is also manageable at 2.8 per cent for the first seven months of 2022 due to price-control measures, particularly through the provision of subsidies of almost RM80 billion this year.
Despite those factors, what was the reaction of some politicians to Zafrul's statement? They accused him of downplaying the ringgit's slide, saying that a downtrend against the greenback would affect Malaysians as it would see an increase in the cost of imported food.
It's as if the minister is too naive not to know this. The problem of the rising cost of imported food predates the current slide in the ringgit. The general problem of rising cost of living is a perennial problem.
Even economists interviewed by a local news portal said the ringgit slide's effect on daily life is minimal although it's best to cut spending.
The writer is the Editor of Let's Talk!, an e-newsletter on current affair