Ad Banner
Advertisement by Open Privilege
United States

Ringgit falls against US$ ahead of a reading on personal consumption expenditures

Image Credits: UnsplashImage Credits: Unsplash
  • The Malaysian ringgit has retreated against the US dollar as investors exhibit caution ahead of the US personal consumption expenditure data release, which is a critical inflation measure affecting Federal Reserve policy decisions.
  • Despite slower US GDP growth in the first quarter of 2024, the ringgit's performance remains mixed against other currencies, influenced by a variety of factors including trade balances, foreign investment flows, and regional economic health.
  • The Malaysian government and financial authorities are actively implementing strategic economic measures to stabilize the ringgit and mitigate the impact of external economic challenges, including the economic slowdown in China and regional geopolitical tensions.

In the early trading hours of Friday, the Malaysian ringgit experienced a slight decline against the US dollar, setting the stage for a cautious market atmosphere as investors awaited the release of the US personal consumption expenditure (PCE) data. This key inflation indicator is closely monitored by the Federal Reserve and could influence future monetary policy decisions.

Economic Indicators and Market Reactions

The ringgit's movement was influenced by a combination of local and international economic indicators. Notably, the US GDP for the first quarter of 2024 grew at a slower pace of 1.6%, compared to the expected 2.5%. This underperformance is a clear signal of a slowing US economy, which traditionally would weaken the dollar. However, the upcoming PCE data has kept the markets on edge, reflecting in the cautious trading of the ringgit.

Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, commented on the situation, stating, "US GDP first quarter (1Q2024) came in lower than expected at 1.6 percent versus a consensus forecast of 2.5 percent, suggesting that the economy slowed in the first three months of this year." He further noted that despite these figures, the PCE price index was higher at 3.4 percent from 1.8 percent in the prior quarter, indicating persistent inflationary pressures.

The Ringgit in the Forex Market

The ringgit's performance was not just limited to its comparison against the US dollar. It showed mixed results against other major currencies. It appreciated against the British pound but depreciated against the Japanese yen and the euro. This mixed performance highlights the complex interplay of factors affecting the ringgit, including trade balances, foreign investment flows, and regional economic indicators.

External Influences and Predictions

External factors such as the performance of the Chinese economy and regional geopolitical tensions also play a significant role in the ringgit's valuation. The sluggish growth in China, a major trading partner, has adversely affected Malaysian exports, adding pressure to the ringgit. Additionally, the currency's future movements are likely to be influenced by the Federal Reserve's decisions on interest rates, based on the PCE data.

Economists and market strategists are closely monitoring these developments. Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore, mentioned, "While the ringgit is likely to sustain a drop beyond 4.80 in the near-term, it is doubtful that it will breach its record low, as US dollar strength is expected to wane".

Strategic Economic Measures

In response to these challenges, the Malaysian government and financial authorities have implemented several strategic measures. These include encouraging the repatriation of foreign investment income and managing interest rates to bolster the ringgit. Such measures are aimed at stabilizing the currency and shielding the economy from external shocks.

As the market anticipates the release of the US personal consumption expenditure data, the ringgit's position remains tentative. The outcome of this data will be crucial in shaping the monetary policies of the Federal Reserve, which in turn will influence global forex markets and the ringgit's trajectory. Investors and policymakers alike remain vigilant, ready to respond to the evolving economic landscape.


Ad Banner
Advertisement by Open Privilege

Read More

Economy Asia
Image Credits: Unsplash
EconomyApril 3, 2025 at 6:00:00 PM

Why cars are becoming less affordable

[UNITED STATES] The surge in car prices, which has left many consumers struggling to afford new vehicles, is not solely the result of...

Tech Asia
Image Credits: Unsplash
TechApril 3, 2025 at 3:30:00 PM

Tesla trails BYD as China sales decline

[WORLD] Tesla has been outperformed by Chinese automaker BYD for the second quarter in a row. The American EV behemoth's troubles are most...

Economy Asia
Image Credits: Unsplash
EconomyApril 3, 2025 at 2:30:00 PM

Trump tariffs: 'A surprise' for close ally Singapore, says ex-US trade official

[SINGAPORE] On April 2, US President Donald Trump issued sweeping tariffs in an effort to replace free trade with "fair" trade, framing it...

Economy Asia
Image Credits: Unsplash
EconomyApril 3, 2025 at 12:30:00 PM

Singapore firms brace for US tariff fallout as costs set to rise

[SINGAPORE] According to a flash survey conducted by the American Chamber of Commerce (AmCham) in Singapore, nearly half (45%) of companies questioned plan...

Finance Asia
Image Credits: Unsplash
FinanceApril 3, 2025 at 12:00:00 PM

Singapore Dollar set to extend outperformance amid global trade shifts

[SINGAPORE] According to a Bloomberg examination of the Singapore dollar's interaction with other markets, its outperformance in the first quarter of 2025 is...

Finance Asia
Image Credits: Unsplash
FinanceApril 3, 2025 at 11:00:00 AM

Asian markets plummet following the announcement of Trump's tariffs

[ASIA] Asian financial markets have taken a sharp nosedive following the announcement of new tariffs by former U.S. President Donald Trump, a move...

Tech Asia
Image Credits: Unsplash
TechApril 3, 2025 at 10:30:00 AM

Apple shares plunge after new tariff announcement

[WORLD] Apple Inc.'s stock price has plummeted following the announcement by US President Donald Trump of sweeping tariffs targeting overseas industrial hubs such...

Tech Asia
Image Credits: Unsplash
TechApril 3, 2025 at 10:30:00 AM

Amazon makes bid for TikTok in last-minute move

[WORLD] Amazon has entered the fray with a late-stage bid to acquire the popular social media platform. The move, which comes amid mounting...

Economy Asia
Image Credits: Unsplash
EconomyApril 3, 2025 at 10:00:00 AM

Trump's case against China as Liberation Day approaches

[WORLD] As the political landscape of the United States begins to shift, the relationship between the U.S. and China continues to dominate global...

Economy Asia
Image Credits: Unsplash
EconomyApril 3, 2025 at 9:30:00 AM

Trump's tariffs mark the end of globalization

[WORLD] Former President Donald Trump's tariff policies have marked a decisive turn away from globalization, reshaping international trade dynamics and fueling debate on...

Finance Asia
Image Credits: Unsplash
FinanceApril 3, 2025 at 9:30:00 AM

Bursa Malaysia falls amid Trump tariff shock

[MALAYSIA] Malaysian equities took a hit this morning as Bursa Malaysia opened sharply lower following U.S. President Donald Trump’s announcement of sweeping new...

Economy Asia
Image Credits: Unsplash
EconomyApril 3, 2025 at 9:00:00 AM

Understanding the U.S. trade imbalance in 2024

[UNITED STATES] The United States has long been running a trade deficit, importing more goods and services than it exports. As this imbalance...

Ad Banner
Advertisement by Open Privilege
Load More
Ad Banner
Advertisement by Open Privilege