FBS Analysts: Malaysian Ringgit Faces Unique External Challenges

FBS Analysts: Malaysian Ringgit Faces Unique External Challenges

by September 4, 2023

Analysts from FBS, a leading global broker, associate the weakening trends in Malaysian Ringgit (MYR) with the challenges in economies of Malaysia’s two main export and import partners: the US and China.

According to the Department of Statistics Malaysia, since the beginning of 2023 the US and China account for almost a quarter of Malaysia’s exports and are among TOP 6 country’s export partners. Due to the deep connections with the US and China, Malaysia can experience aftershocks of their economic uncertainties. As FBS analysts point out, in 2023 MYR has been showing the worst performance among all currencies in Southeast Asia. Despite efforts by the Bank Negara Malaysia to stabilize the currency through monetary interventions, investor confidence remains elusive.

In this context, USDMYR rate has been impacted by the undermined strength of US stocks after the debt-ceiling turbulence in the US in June 2023, the US credit rating downgrades by Fitch and Moody’s, and speculations about the potential interest rate raising by the US Federal Reserve in September 2023. At the same time, China seems to fall behind the expected post-COVID recovery pace, as the Central Bank of China approached rate cuts earlier in August to ease monetary efforts.

Spurred by these alarming global trends, on August 28, USDMYR was heading towards the resistance level of 4.67. If the further breakout happens, the next target for bulls will be 4.70, reaching the peak of Autumn 2022. FBS analysts await further pressure on the Malaysian Ringgit, as the US stock market is reaching the turbulent period of presidential elections. Gradual weakening of the MYR is expected to continue throughout the third quarter of 2023, as Malaysia’s stock market is likely to be affected by the upcoming global announcements.


Disclaimer: This material does not constitute a call to trade, trading advice or recommendation and is intended for informational purposes only.


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