The Climbs and Drops of the Malaysian Ringgit Rollercoaster
The Malaysian ringgit has faced significant turbulence in recent months, characterized by rapid gains followed by a dramatic decline. In Q3 2024, the ringgit surged by an impressive 14% against the US dollar, positioning it as Asia’s best-performing currency. This appreciation stemmed from Malaysia’s strong economic recovery following the end of the pandemic. The GDP rose by 5.8% year-on-year in Q2 2024, exceeding expectations. This growth was driven by a revitalized manufacturing sector and a surge in domestic demand as the country rebounded from pandemic-related disruptions. Government initiatives to attract foreign investments and structural reforms further bolstered the currency’s performance.
However, October brought a steep reversal. The ringgit fell over 6%. This marked its most significant monthly loss since 2015, trading at 4.39 per dollar by October 30. This decline coincided with mounting global uncertainty surrounding the U.S. presidential election. Additionally, shifting expectations regarding Federal Reserve policies contributed to the unease. These factors caused investors to move away from riskier assets. The ringgit’s high sensitivity to the yen and yuan added to the pressure, with only the Japanese yen faring worse, depreciating 6.3% against the dollar.
Measured Ringgit Decline Under Najib, Volatile Under Current Leaders: The Irony
This current volatility contrasts starkly with the gradual and measured depreciation seen during Prime Minister Najib Razak’s tenure, when the ringgit reached SGD 1 to RM 3. Back then, the decline allowed businesses and investors a sense of predictability. During this period, Rafizi Ramli and Anwar Ibrahim, who were then in the opposition, were vocal critics. They promised that under their leadership, the ringgit would strengthen. They assured the public that Malaysia’s economic future would be brighter with them at the helm.
Now, as leaders, both Rafizi and Anwar face scrutiny over the ringgit’s performance despite their assurances of “strong fundamentals and positive economic prospects.” Bank Negara Malaysia (BNM) pledges to manage volatility and emphasizes the country’s economic resilience. However, the ringgit’s trajectory remains influenced by global factors. These include U.S. election outcomes and potential Federal Reserve rate adjustments. Analysts at OCBC and MUFG Bank foresee the ringgit potentially strengthening to between 4.12 and 4.22 per dollar by year-end if a Democratic win reduces tariff risks impacting Asian economies.
What stands out now is the irony: during Najib’s time, protests erupted over the currency’s performance, fueled by NGOs and public outcry. Today, those same NGOs have seemingly disappeared. It raises the question—were these so-called NGOs supporting Anwar and Rafizi all along?
