The Malaysian currency, the ringgit, has moved closer to its pre-peg 17-year low following news that the country's foreign exchange reserves fell below the crucial $100-billion mark, raising concerns over the currency's ability to withstand further political fallout and low commodity prices, Reuters' reported.
The ringgit is being traded at 3.9270 per US dollar at Monday noon, compared to its previous close of 3.9220. On Friday, the currency hit 3.9280, its weakest level since 1998, just before the government pegged it at 3.8 against the dollar during the Asian financial crisis. The peg was later lifted in 2005.
According to Bank Negara Malaysia (BNM), the country's central bank, forex reserves fell nearly 4 per cent to $96.7 billion on 31 July, down from $100.5 billion on 15 July.
Traders expect the central bank to continue selling dollars to arrest the slide, which it has been doing since June.
The ringgit has been one of the worst performing Asian currencies, which has lost about 22 per cent of its value during the past one year. The currency has fallen 2.7 per cent in the past one week.
Malaysia, the third-biggest economy in the ASEAN region, has been recently hit by political outrage and slumping commodity prices.
Its prime minister Najib Razak is involved a scandal over billions of dollars allegedly missing from the country's sovereign wealth fund, Malaysia Development Berhad (1MDB).
The oil and gas sector accounts for about 30 per cent of the government's revenue last year. Oil prices have plunged about 30 per cent since May to $48.38 a barrel for Brent on Friday.
Further to the weaker currency, global investors cut holdings in Malaysian government and corporate bonds, which dropped 2.4 per cent in July to $52.7 billion, the lowest level in three years.