Malaysian Ringgit’s Trend to be Decided by Multiple External Factors

As per an economist, the ringgit is forecast to be affected by external forces next week, with investors having a close watch on retail sales data from the United States. When queried if the ringgit would stay weak in the coming week if the positive trend in the US data persisted, Mohd Afzanizam Abdul Rashid, chief economist at Bank Islam Malaysia Bhd, responded affirmatively.

His assertion is supported by the most latest gross domestic product (GDP) figures, which show that the economy suffered a significant setback as a result of the movement control order during the third quarter of this calendar year (3Q21).

Bank Negara Malaysia (BNM) reported on Friday (November 12) that Malaysia’s gross domestic product (GDP) shrank by 4.5 percent in the September 2021 quarter, compared with the 16.1% rise recorded in the preceding three months of the year.

Following analysts’ predictions, the reimposition of nationwide containment measures over the time period under study was a contributing factor to the increase in unemployment. According to the BNM, GDP growth slowed to -2.7 percent in the third quarter of this year from the previous quarter.

Mohd Afzanizam believes that the situation would improve in the fourth quarter of the year as a result of the easing of the interstate travel ban, which will aid in the stimulation of economic activity. “It has the prospects to be advantageous to the ringgit in that regard.”

Nevertheless, for the time being, the threat of inflation will be the most important factor in maintaining a restricted range in the US dollar-to-ringgit exchange rate. During an interview with Bernama, he predicted that the local currency will be hanging at 4.16 against the US dollar by the end of next week.

The governor of the Bank Negara Malaysia (BNM), Datuk Nor Shamsiah Mohd Yunus, claimed that the ringgit has increased by 0.9 percent against the US dollar as of November 9 (since October 1), generally in line with the trajectory of other regional currencies at the time. Her comments were followed by a statement stating that the strengthening of the local currency was further aided by a stronger internal outlook as a result of the revival of the economy and the rise in commodity prices.

She projected that the financial and foreign currency markets will experience frequent bouts of volatility in the future as long as there are concerns about global liquidity adjustments and events surrounding the path of the epidemic continue to be present. From Friday’s close to Monday’s close, the local currency gained strength versus the dollar, rising from 4.1690/1720 at Friday’s close to 4.1645/1665 at Monday’s close.

When compared to the previous Friday, the local unit gained the vast majority of its worth versus the other major currencies in the international trade. The ringgit was trading at 3.0757/0776 against the Singapore dollar a week ago, down from 3.0729/0746 the previous week.

Additionally, it increased its strength against the euro, rising to 4.7646/7569 from 4.7997/8020 a week earlier, increased its strength against the Japanese yen, rising to 3.6521/6542 from 3.6536/6553 a week earlier, and increased its strength against the British pound, rising to 5.5783/5810 from 5.5865/5892 a week earlier.