Demand and supply imbalances in the domestic foreign exchange market intensified the pressure on the ringgit's decline, said Bank Negara governor Muhammad Ibrahim.
"Our country has been a net exporter and the current account position in the balance of payments has always been in surplus since more than a decade ago.
"However, when the imbalances formed as a result of foreign exchange export proceeds not being converted into ringgit, conditions deteriorated and thus reduced the demand for the ringgit," he said in his opening remarks at the 'Karnival Kewangan 2017', held on Friday.
It also occurred due to other factors, for example, in 2015, capital outflows due to the spending of Malaysians abroad amounted to RM41 billion while outflows from foreign worker remittances amounted to RM34 billion.
"Hence, when the demand for the currency falls, the currency will consequently depreciate," he said when outlining reasons for the ringgit's decline.
To stem the ringgit's depreciation, the central bank took several measures last December, which included allowing exporters to retain only up to 25 percent of export proceeds in foreign currencies.
The remaining 75 percent has to be ringgit denominated.
Other reasons for the decline was also due to some investors taking advantage, amid the market turmoil and uncertainty, to gain profits through speculative activities in the offshore ringgit non-deliverable forward market.
The bank's proactive steps had helped subside the disruptive influence of speculative activities on the ringgit in the offshore market, he said.
"In addition, imbalances in the domestic foreign exchange market have improved while the ringgit's volatility has also reduced," he said.
The governor also revealed that legal action was taken on several foreign banks that were severely fined for being involved in manipulative price fixing.