(Bloomberg) -- Malaysian Prime Minister Anwar Ibrahim said the ringgit’s slide this week to its lowest level since the Asian financial crisis is “concerning” and that the authorities are watching the currency’s fluctuations.

“We have assigned the central bank to monitor, but it is affecting all countries,” Anwar told reporters on Friday. “Ideally, the ringgit should be under control.”

The local currency briefly slipped past 4.8 against the dollar this week, the weakest level since January 1998, the height of the crisis that roiled Asian financial markets. 

Sputtering growth in China, Malaysia’s biggest trading partner, has weighed on the export-reliant economy. Economists have lowered their forecasts for 2024 gross domestic product growth to 4.3% from 4.5%, after last year’s expansion missed estimates.

Malaysia’s wide interest rate gap with the US also dimmed the allure of its assets, while concerns over political stability linger. 

The ringgit — emerging Asia’s worst performer last year — has slid almost 4% in 2024. It fell 0.1% to 4.7782 as of 12.30pm in Kuala Lumpur, after strengthening in the previous two days. 

READ: Ringgit Fundamentals Justify Further Weakness

While a weaker currency is positive for the country’s exports and tourism, it is impacting margins for local businesses that import materials for their operations. It may also affect companies with dollar-denominated debt. 

Malaysia’s exports had contracted for 10 consecutive months before growing 8.7% year-on-year in January. 

To be sure, Malaysia’s foreign exchange reserves are above the five-year average, which may provide some support for the ringgit.

Bank Negara Malaysia Governor Abdul Rasheed Ghaffour said on Tuesday that external factors are hurting the ringgit and that its current level doesn’t reflect “the positive prospects of the Malaysian economy going forward.” He added that analysts were forecasting for the currency to appreciate this year.  

--With assistance from Ram Anand.

(Adds details on foreign exchange reserve and impact of weaker ringgit)

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