The currency dropped by 0.3% to 4.7635 per dollar, the weakest since 1998.

It is the worst performer in Asia this year after the yen.

The latest bout of losses comes as the dollar gains on haven demand amid concerns over the Israel-Hamas conflict.

Malaysia also posted six straight months of decline in exports in August, partly due to a slowdown in China, its largest trading partner.

Meanwhile, the September export figures are due at noon today.

Bank Negara Malaysia’s (BNM) decision to pause interest rate hikes since July is also adding headwinds for the currency as global central banks sound hawkish.

That has put the local overnight policy rate at a record discount relative to the upper bound of the US federal funds rate.

According to Mizuho Bank Ltd Singapore’s head of economics and strategy Vishnu Varathan, the ringgit’s underperformance has been due to “real rate spreads that could turn a lot more unfavourable, especially as the subsidy rollback hits inflation and reveals softer real policy rates”.

“Policymakers face a trade-off between economic headwinds from higher rates or the risk of not responding and endangering macro and ringgit stability,” he added.