Ad Banner
Advertisement by Open Privilege
Malaysia

Ringgit faces uncertain future amid economic challenges

Image Credits: UnsplashImage Credits: Unsplash
  • Malaysia's economy is expected to grow between 4% to 5% in 2023, with a strong current account surplus.
  • The Ringgit's performance is heavily influenced by external factors, including US Fed rate decisions and China's economic growth.
  • Bank Negara Malaysia is actively managing market volatility and implementing structural reforms to support the Ringgit.

The Malaysian Ringgit (MYR) has been under considerable pressure, with no clear inflection point in sight. Despite some positive economic indicators, the currency's performance remains heavily influenced by external factors and market sentiments.

Bank Negara Malaysia (BNM) has been actively managing market volatility to ensure orderly conditions. As part of its ongoing efforts to reduce excessive market volatility and maintain orderly market conditions, Bank Negara will continue to maintain its participation in the foreign exchange market in order to offer liquidity. It is the intention of this proactive approach to reduce the influence that developments from the outside world have on the Ringgit.

Economic Fundamentals and External Influences

Malaysia's economic fundamentals remain strong, with the economy expected to grow between 4% to 5% in 2023. The country has maintained a current account surplus, equivalent to 3.3% of GDP in the second quarter of 2023 . However, the Ringgit's exchange rate does not fully reflect these robust fundamentals. The currency has depreciated by 4.9% year-to-date, influenced by aggressive policy rate hikes by other central banks and weaker-than-expected economic growth in China, one of Malaysia's largest trading partners.

Interest Rates and Inflation

The direction of the US Federal Reserve's interest rates significantly impacts the Ringgit. Economists predict that the Fed will cut its target rate six times by the end of 2024, which could help the Ringgit recover against the US dollar. However, the interest rate differential may still be unfavorable for the Ringgit. "Our current view for the Ringgit to recover in 2024 is driven predominantly by expected Fed rate cuts in 2024, while Bank Negara is more likely to hold rates rather than cut".

Structural Reforms and Future Prospects

Structural reforms underway in Malaysia are expected to enhance growth potential, attract investment, and support the Ringgit. BNM's international reserves, amounting to US$112.3 billion, are sufficient to finance 5.4 months of imports and meet international standards . These reserves provide a buffer against external shocks and support the currency's stability.

Challenges and Opportunities

Despite these positive aspects, the Ringgit faces several challenges. The global economic environment, particularly the performance of major economies like the US and China, will continue to influence the currency. Additionally, commodity price adjustments and the recovery of the tourism sector will play crucial roles in shaping the Ringgit's future.

While Malaysia's economic fundamentals are strong, the Ringgit's performance remains uncertain due to external factors and market sentiments. Continued efforts by BNM and the government to manage volatility and implement structural reforms will be crucial in navigating these challenges.

Ad Banner
Advertisement by Open Privilege

Read More

Culture Malaysia
Image Credits: Unsplash
CultureJuly 13, 2024 at 1:30:00 AM

Why assigning tasks before vacation often fails

As the summer months approach and vacation plans are finalized, many professionals find themselves scrambling to delegate tasks before their well-deserved time off....

Housing Malaysia
Image Credits: Unsplash
HousingJuly 12, 2024 at 11:30:00 PM

The pitfalls of co-owning property with relatives

Owning a property is often seen as a rite of passage, a step towards financial independence and stability. However, the path to homeownership...

Finance Malaysia
Image Credits: Unsplash
FinanceJuly 12, 2024 at 11:30:00 PM

CHAPS: The backbone of high-value transactions in the UK financial system

The Clearing House Automated Payment System, commonly known as CHAPS, is a vital component of the UK's financial infrastructure. Established in 1984, CHAPS...

Self Improvement Malaysia
Image Credits: Unsplash
Self ImprovementJuly 12, 2024 at 10:30:00 PM

How to tell if someone is lying

In an era where misinformation and deception seem to be on the rise, the ability to discern truth from falsehood has become an...

Self Improvement Malaysia
Image Credits: Unsplash
Self ImprovementJuly 12, 2024 at 9:30:00 PM

Speed up your success: 2 powerful ways to reach your goals more quickly

Achieving your goals can often feel like an uphill battle, but with the right strategies, you can fast-track your success. Two powerful techniques...

Financial Planning Malaysia
Image Credits: Unsplash
Financial PlanningJuly 12, 2024 at 6:00:00 PM

Tips on how to make the most of possible Fed interest rate cuts

As the Federal Reserve (Fed) contemplates lowering interest rates, individuals need to be proactive in managing their finances to capitalize on potential changes...

Health & Wellness Malaysia
Image Credits: Unsplash
Health & WellnessJuly 12, 2024 at 4:30:00 PM

A famous bodybuilder talks about the two supplements he definitely wouldn't use

Renowned bodybuilding coach Cliff Wilson, a prominent figure in the fitness world, is known for his expertise in guiding athletes to peak performance....

Relationships Malaysia
Image Credits: Unsplash
RelationshipsJuly 12, 2024 at 4:00:00 PM

Do you need a "social-media concierge" for your wedding?

Weddings have evolved beyond traditional ceremonies and receptions. With the rise of social media platforms like Instagram and TikTok, couples are now faced...

Financial Planning Malaysia
Image Credits: Unsplash
Financial PlanningJuly 12, 2024 at 4:00:00 PM

Essential money lessons for kids and teens

Teaching children about money has become more crucial than ever. As parents, we have the responsibility to equip our kids with the financial...

Technology Malaysia
Image Credits: Unsplash
TechnologyJuly 12, 2024 at 2:30:00 PM

The bad side of social media: Telling the dark truth

Social media has become an integral part of our daily lives, connecting us with friends, family, and the world at large. However, beneath...

Housing Malaysia
Image Credits: Unsplash
HousingJuly 12, 2024 at 2:30:00 PM

As a result of high housing costs, divorced couples are still living together

In today's challenging real estate market, a new and unexpected trend is emerging: divorced couples continuing to live together due to skyrocketing housing...

Tech Malaysia
Image Credits: Unsplash
TechJuly 12, 2024 at 1:30:00 PM

Tesla's autonomous ambitions hit speedbump: Robotaxi event postponed

Tesla, the electric vehicle pioneer led by tech visionary Elon Musk, has announced a delay in the unveiling of its much-anticipated robotaxi. This...

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