The Malaysian ringgit has slid again compared to the US greenback, with turmoil in the Middle East and anticipation of the US Federal Reserve keeping interest rates higher for longer.
This time, the ringgit slid to 4.7800 to the dollar, which is close to the record low of 4.8850 which was reached in 1997, following the fallout of the Asian Financial Crisis. So far, the lowest the ringgit has slid against the greenback since then was in February, when the ringgit fell to 4.8053.
Middle East turmoil chief contributor
During the weekend, Iran finally retaliated against Israel’s attack on its consulate in the capital of Syria, Damascus which happened on the 1st of April.
In the retaliation, Iran fired more than 300 rockets, missiles and drones towards Israel. A majority of which failed to reach their intended targets according to Israeli authorities.
According to a report from The Star, Sunway University professor of economics Yeah Kim Leng stated that the impact of this attack will be immediately felt albeit indirectly, in the form of higher global uncertainties and global risk aversion.
He also told The Star that the US dollar is being strengthened by the fact that the expectation has changed in terms of the Federal Reserve interest rate cutting cycle.
Right now, it is expected that the interest rate cutting cycle will happen later rather than sooner, as the numbers for inflation and jobs strengthens.
Bank Negara ready to support the ringgit
In a statement released yesterday, Bank Negara Malaysia (BNM) has stated that they are ready to use every tool they have to ensure that the Malaysian financial markets remain orderly and efficient.
BNM also stated in the same statement that their market operations will ensure sufficient liquidity, supported by their ongoing initiatives with other financial players such as Government Linked Companies (GLCs) and Government Linked Investment Companies (GLICs).
