Malaysian ringgit skids to near historic low

By Minh Hieu   February 19, 2024 | 11:21 pm PT
Malaysian ringgit skids to near historic low
50 ringgit banknote. Photo by Freepik
The Malaysian ringgit slid to its weakest in over three months, raising concerns that the country’s declining exports and strengthening dollar could push it past its all-time low.

On Tuesday it was trading in the range of 4.79 to the dollar, just 2% shy of the 4.885 it hit in 1998.

Sluggish exports, compounded by risks of political instability amid alleged efforts to undermine Prime Minister Anwar Ibrahim’s administration and the enduring dominance of the U.S. dollar, have contributed to the depreciation of the ringgit, Bloomberg reported.

Exports declined for a 10th consecutive month in December under the impact of China’s economic slowdown.

While Malaysia’s trade surplus remains positive, its trade surplus to gross domestic product ratio has plummeted to a two-decade low, weakening support for the ringgit.

The dollar index, which reflects the strength of the greenback against major currencies, soared to a three-month peak of 104.95 last Thursday as inflation eased less than forecast in the U.S, Nikkei Asia reported.

These indicators have reduced expectations of an interest rate cut in recent weeks.

The likelihood of the central bank reducing its rate in March has dwindled to around 10% from 80% a month ago, as speculated by the CME FedWatch.

Persistently high U.S. yields are poised to drive further demand for the dollar, thereby reinforcing its strength.

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