Financial services company Credit Suisse believes the ringgit will depreciate even further against the US dollar in the coming months.
In three months, they expect the greenback to be trading at 4.50 to the ringgit, reported CNBC .
Meanwhile HSBC analysts were also reported saying they believe the ringgit has yet to reach its worst-case scenario, citing their concern for the falling price of palm oil.
"It is possible for the dollar-ringgit to go into uncharted territory. This time around, the broad US dollar is appreciating also on its own merits," the analysts said.
This is why they do not believe the comparisons between the ringgit's precarious situation in 1997 and now would provide an accurate prediction on how much further the ringgit could fall.
Merrill Lynch analyst Chua Hak Bin also said he is not comforted by the 1997 comparisons.
"Some leverage indicators are much higher than in 1997, including household, public and external debt," he noted.
He pointed out that data showing household debt as a percentage of the gross domestic product (GDP) is currently at 86 percent, compared with 46 percent in 1997.
Public debt as a percentage of the GDP is also higher at 54 percent, a significant increase from 31 percent in 1997, he said.
Investors may abandon ship
Chua also expects foreign investors to begin unwinding their holdings of Malaysian government bonds after the increase of interest rates by the Federal Reserve, expected to take place later this year.
"The current currency crisis may not be a repeat of history and 1997, but it sure rhymes and is probably far from being over," he said.
While it's difficult to gauge the effects political uncertainty has had on the ringgit performance so far, the HSBC analysts said its effects will become more pronounced.
"Politics will become more significant for the currency if policy risks and economic costs start to materialise," they said.
The country is currently being rocked by the 1MDB debt crisis as well as a series of scandals beleaguering Prime Minister Najib Abdul Razak.
Foreign authorities in Switzerland, US, Hong Kong and Singapore have opened probes into these issues over allegations of money laundering.
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