The Malaysian currency surged to its highest level against the greenback since March 2022 after the 50 basis points rate cut in the US that exceeded initial forecasts, continuing a rally that began in January this year. For the year to date, the ringgit has regained over 11 percent of its value against the US Dollar.
The most recent bump is mostly caused by the Federal Reserve policy rate cut but the ringgit has been strengthening against the dollar since January this year, which analysts have attributed to growing investors’ confidence in the Malaysian economy as foreign investments drive demand for the currency. Fiscal reforms that included the diesel subsidy recalibration could have given assurance about the government’s commitment to narrow their deficit while major economic blueprints such as the Energy Transition Roadmap and a new Industrial Master Plan had bolstered inflows into local companies.
Global funds poured nearly half a billion ringgit in Malaysian stocks as of August this year, Bloomberg reported last month.
Some analysts have also attributed the currency’s strong performance to the stable political leadership, as Prime Minister Anwar Ibrahim has managed to allay fears that his coalition government of political parties that included former rivals could disintegrate, keeping it solidly intact until today. A stable government means investors need not worry about disruptions to policies and projects as they plan their investments.
Ringgit’s performance has been a surprise for analysts given it was among currencies that fared poorly in 2023. Still, Bank Negara Malaysia maintained that the ringgit’s rout last year did not reflect the real strength of the Malaysian economy, and it did predict that the currency would improve by this year.
The currency has performed well against a basket of major currencies, including the euro and Singapore dollar. On Friday, it gained versus the euro to 4.6878/6950 and edged up against the Singapore dollar to 3.2507/2559 from 3.2567/2632 at Thursday’s close.
FYI, the ringgit was at 3.4326 against the Singapore dollar in the same month last year. Across year, the Malaysian currency has clawed back over 5 percent of its value against its Singaporean opposite.
In fact, the ringgit could trade stronger in the coming weeks, say Kenanga Research analysts. They expect the ringgit vis-a-vis the US Dollar to trade in the 4.15-4.20 range over the coming weeks.
Yesterday, in the Scottish League Cup quarter-finals, Celtic had to come from behind against battling Falkirk before winning 5-2.
The Bairns took a shock lead on eleven minutes before Alex Valle met a lofted pass from Reo Hatate in the penalty area and flicked a clever header up for Paulo Bernardo to thrash in a sweet volley in the 21st minute and even the score.
On forty-five minutes, the Bairns took the lead again. Nicolas Kuhn who was one of four substitutes to enter on the hour mark, twice set up Adam Idah for a quickfire double (70, 72) to turn the game on its head before the German winger netted twice (81, 84) himself.
The scoreline was harsh on a Falkirk side who arguably posed Celtic their toughest challenge of the season before the final 20 minutes.
The latter join Rangers, Aberdeen and Motherwell in the Scottish League Cup last four.
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