TOKYO/MALAYSIA: The Malaysian ringgit hit its highest level against the US dollar since April 2023 in Tokyo trading on Monday. This gain was driven by Malaysia’s strong economic performance and weak US economic data, leading to a dollar sell-off.
According to Nikkei Asia, the ringgit climbed to the low 4.39 range against the dollar, marking a significant rebound after months of decline.
Earlier this year, the ringgit had slumped, reaching its lowest point since 1971 in late February, based on data from the London Stock Exchange Group. The recent increase in US unemployment rates has shifted market sentiment, contributing to the ringgit’s recovery.
According to Toru Nishihama, chief economist at Dai-ichi Life Research Institute, “There was unwinding of the overselling that had come before this.”
Malaysia’s strong economic performance has played a key role in the ringgit’s recovery. The country’s gross domestic product (GDP) grew by 5.8% year-on-year in the April-June period, accelerating from the previous quarter, according to preliminary data released last month.
Takahiro Hori, market economist at Mizuho Bank, also noted, “Amid a marked slowdown in the Association of Southeast Asian Nations, Malaysia has remained relatively stable.”
Despite this positive performance, potential challenges remain. Lower crude oil prices could pose a risk to the oil-producing nation’s currency. On Friday, US West Texas Intermediate (WTI) crude futures fell to a roughly two-month low, which could impact Malaysia’s economic stability and, in turn, the ringgit.
On Friday, Aug 2, the ringgit rose by 1.6% against the US dollar, marking its 10th straight day of gains, the longest streak since 2010. /TISG
Featured image by Depositphotos
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