[MALAYSIA] The ringgit fell to open modestly lower today, pulled down by pressure on the US dollar following US President Donald Trump's remarks on worldwide retaliatory tariffs. At 8 a.m., the ringgit was trading at 4.4425/4445 against the US dollar, down from 4.4400/4460 at the closing yesterday.
The latest tariff measures come amid rising global trade tensions, with economists pointing out that emerging market currencies such as the ringgit are especially exposed to changes in US trade policy. Malaysia's export-driven economy has historically been vulnerable to protectionist policies, thanks to its reliance on trade with the United States, which accounts for about 9% of total exports.
The Trump administration slapped broad reciprocal tariffs, with the White House releasing a list of approximately 100 countries and their tariff rates, which included Malaysia.
Economists warn that the 24% tariff on Malaysian goods could disproportionately impact key sectors such as electronics, rubber products, and palm oil. Malaysia, as the world’s second-largest palm oil producer, has already faced challenges from European Union sustainability regulations, and the new US tariffs could further strain export revenues.
Malaysia would face a 24% reciprocal tax from the US beginning April 9. In response, Malaysia's Ministry of Investment, Trade, and Industry stated that it is willing to engage in conversations with the United States, indicating a pragmatic approach.
Market watchers suggest that Malaysia may explore alternative trade partnerships, including deepening ties with China and other ASEAN nations, to mitigate the impact of US tariffs. However, such a shift could take time, leaving the ringgit exposed to short-term volatility as investors assess the broader implications of Trump’s trade policies.
SPI Asset Management Managing Director Stephen Innes told Bernama that if Malaysia's delegation successfully negotiates concessions with the US, the ringgit may get some breathing room. He added the FX markets are expected to be cautious ahead of tonight's US nonfarm payrolls.
Meanwhile, Dr Mohd Afzanizam Abdul Rashid, chief economist of Bank Muamalat Malaysia Bhd, said Trump's trade policy has sent a tremor across global financial markets.
He added that the US Dollar Index (DXY) fell 1.78 percent to 101.956 points, while the 2- and 10-year US Treasury yields fell 18 and 10 basis points, respectively, to 3.68 percent and 4.03 percent.
"Trump seems unperturbed by such development and, in fact, expressed confidence more nations would come forward to call for trade negotiations. On the flip side, he is open to discussion and willing to compromise should the deals favour the US. Be that as it may, the uncertainties on trade policy are affecting business and consumer sentiments in the US as their cost will go up,” he said.
As a result, Mohd Afzanizam believes the prospect of slower development has become more obvious, implying that the US Federal Reserve may ease monetary policy. The ringgit traded largely lower against the major currencies.
It fell slightly against the Japanese yen to 3.0376/0392 from 3.0289/0332, weakened versus the euro to 4.9072/9094 from 4.8969/9035, and rose against the British pound to 5.8152/8179 from 5.8470/8549 yesterday.
The local currency was largely weaker against ASEAN currencies. It fell against the Thai baht to 12.9708/9869 from 12.9529/9769, and against the Indonesian rupiah to 265.2/265.5 from 265.1/265.6 at yesterday's closure. It also fell against the Philippine peso to 7.78/7.79 from 7.77/7.79, and against the Singapore dollar to 3.3275/3292 from 3.3229/3276 before.
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