The Malaysian ringgit is nearing its closing low against the US dollar of 4.7125, reached in January 1998. Economists at ANZ Bank expect the MYR to remain under pressure into next year. 

Ringgit a hostage to rampant dollar

“There are some supportive factors for the MYR. Elevated oil prices are helping Malaysia maintain strong trade surpluses. We see oil prices pushing back toward $100/bbl in the near-term, which is positive for MYR. In addition, Malaysia has managed to attract portfolio inflows this year, which bucked the regional trend of large outflows.”

“Given our view that the fed funds rate will reach a peak of 5.00% by Q2 2023, while the BNM will tighten more slowly to a terminal rate of 3.50% in the OPR, we expect the MYR to be under pressure into next year.”

“Domestic factors, such as the budget, Malaysia’s growth resilience and the prospect of an early election, are unlikely to have a material bearing on the MYR. In the current environment, it is all about the USD.”