KUALA LUMPUR (BLOOMBERG) - The recent slump in Malaysia's ringgit is overdone and the currency may return to a more fundamental value once concern eases over the central bank's foreign-exchange administrative rules, according to the nation's second-biggest lender CIMB.
The ringgit has lost more than 5 per cent in the past one month, becoming the worst-performing currency in emerging Asia, after a central bank crackdown on trading in the offshore, non-deliverable forwards market in November spurred outflows. Global funds cut holdings of Malaysian government bonds by 8.8 per cent to RM196.1 billion (S$63 billion) in November from the previous month, the biggest decline since July 2013.
"We should look at the fundamental reasons why the ringgit may have overshot," CIMB Chairman Nazir Razak said in an interview at the Bloomberg Asean Business Summit in Hanoi. "Maybe the ringgit will go back to a more fundamental valuation once the dust settles."
He estimated the ringgit's fair value at 4.10 to 4.20 per dollar. The Malaysian currency ended 0.2 per cent higher at 4.4222 on Thursday (Dec 8).