Malaysia's central bank says the ringgit, which plunged 14.4 percent against the U.S. dollar since September, is sharply undervalued but ruled out reintroducing capital controls.
The ringgit has slid to 3.70 to the dollar, making it one of Asia's worst performing currencies recently.
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Bank Negara Malaysia's Governor Zeti Akhtar Aziz says the ringgit's depreciation was expected due to the U.S. Federal Reserve ending its bond purchases last year, followed by plunging oil prices.
Even if the ringgit slides further, Zeti said Malaysia will not peg it to the dollar because that could cause an "extreme period of dislocation" and "pain" to the country.
In 1998 amid the Asian financial crisis, the ringgit was pegged at 3.80 to the greenback as part of capital controls. The peg was scrapped in 2005.