The ringgit has weakened to around 3.23 against the US dollar, confounding analysts’ earlier predictions that the ringgit would strengthen below 3.00 by year end.
Among the factors contributing to the weaker ringgit:
– concerns that investors will repatriate government debt maturing tomorrow.
– persistent fiscal deficit concerns
– concerns over structural weaknesses that have eroded the current account surplus. Moreover, 36 per cent of revenue is from petroleum, a depleting natural resource.
– debt-to-revenue ratio of 237 per cent in 2012, which “puts the sovereign at risk of an outlook downgrade”. This ratio puts Malaysia in the category of other heavily indebted nations.