KUALA LUMPUR: Malaysia’s central bank on Tuesday said the ringgit currency, which briefly hit a 26-year-low last week, is undervalued and should be trading higher on account of the country’s positive economic fundamentals and prospects.

Bank Negara Malaysia (BNM) Governor Abdul Rasheed Ghaffour said in a statement the central bank has stepped up engagements with government-linked investment companies, government-linked companies, corporations and investors to encourage continuous inflows to the foreign exchange market.

“Given Malaysia’s positive economic fundamentals and prospects, the ringgit ought to be traded higher,” he said in a statement.

The ringgit is trading near lows last seen in January 1998, when it reached 4.885 against the dollar.

The Southeast Asian currency had strengthened slightly to 4.777 against the dollar by 0215 GMT on Tuesday.

The currency has slumped 4% against the dollar so far this year, extending its poor performance in recent years.

The central bank last week said the ringgit’s recent performance was largely due to external factors and did not reflect the positive prospects of Malaysia’s economy.

Abdul Rasheed said given improving exports , a recovery in tourism, an increase in investments, and the government’s commitment to structural reform, most analysts were forecasting the ringgit to appreciate this year.

Asian currencies: Malaysian ringgit around 26-year-low

Malaysia’s Prime Minister Anwar Ibrahim on Friday said while the ringgit’s fluctuation was concerning, the country’s strong fundamentals underpinned a promising outlook for the economy.

Anwar said Malaysia’s growth could be sustained as investments were high while inflation and unemployment were down.

He said the ringgit’s current performance should not be compared to 1998, when the nation’s inflation and joblessness rates were high and foreign investors had kept away.