KUALA LUMPUR, April 17 — The ringgit remains resilient despite the strengthening US dollar amid expectations that the US Federal Reserve (Fed) would maintain interest rates higher for longer.
Economist Geoffrey Williams said all currencies are suffering against the greenback globally, and the ringgit is more resilient at present because Bank Negara Malaysia (BNM) has been effective in managing the market.
Malaysia is pooling all the necessary resources to support the local currency with BNM stating that it stands ready to deploy the tools at its disposal to ensure the Malaysian financial markets remain orderly and continue to function efficiently.
Williams said the ongoing coordinated efforts to encourage more consistent inflows by the government-linked companies and government-linked investment companies, as well as greater engagements with Malaysian corporates and businesses, have resulted in a positive impact and are deemed sustainable.
“The inflows from the coordinated efforts have helped to stabilise the ringgit,” he told Bernama.
The ringgit is currently hovering at 4.79 versus the US dollar.
Today, the ringgit closed firmer against the US dollar amid a technical rebound after three days of losses. At 6 pm, it was quoted at 4.7910/7950 against the greenback compared with Tuesday’s closing of 4.7945/7970.
According to Bloomberg data, since Feb 26, 2024, when the coordination efforts by the government began, the ringgit has only declined by 0.38 per cent versus the US dollar.
By comparison, the Indonesian rupiah was down 0.70 per cent versus the US dollar, the Thai baht 1.35 per cent, the Singapore dollar 1.60 per cent, the Philippine peso 1.90 per cent, the Chinese yuan 0.57 per cent, the Japanese yen 2.72 per cent, the Taiwan won 2.88 per cent, and the South Korean won 4.56 per cent.
Williams said the declining ringgit is not a reflection of the country’s underlying economic fundamentals as the local note’s current value is highly influenced by external factors.
“The current value of the ringgit has all to do with global factors, including geopolitical issues in the Middle East which are raising risk and signals from the Fed that interest rates will remain high for longer.
“This is pushing money out of markets like Malaysia to places with higher returns such as the United States,” he said.
Meanwhile, Putra Business School’s Master of Business Administration programme director, Associate Prof Ahmed Razman Abdul Latiff, said that despite the lower ringgit, the local currency emerged as the best performer among Asean currencies.
“Our economic fundamentals have remained strong and resilient. We are still registering positive quarterly gross domestic product growth as well as positive current account and trade balances,” he said.
Ahmed Razman said the foreign exchange market is expected to remain volatile throughout the second quarter of the year as there is no indication of the Middle East crisis de-escalating anytime soon coupled with the possibility of the Fed keeping interest rates high for now.
Hence, the ringgit’s performance will remain erratic for the time being, he said.
According to him, long-term measures need to be taken to ensure its continued stability.
“The Malaysian government may be taking proactive measures to mitigate the potential impact of geopolitical risks, such as diversifying energy sources, strengthening diplomatic ties to ensure stability in the region, and closely monitoring market developments.
“Malaysia can work with international partners to monitor and manage risks, ensure market stability, and promote economic resilience,” he added. — Bernama
