Additionally, political developments and stability in the country can have significant impacts. The Malaysian Ringgit is influenced by a range of internal and external factors that affect its price in the foreign exchange market.ĭomestically, macroeconomic indicators such as GDP growth, inflation, trade balance, and monetary policy can all shape market sentiment towards the MYR. Since then, the MYR has gradually regained strength thanks to improved economic prospects, higher commodity prices and accommodative policy. The MYR reached its lowest level in over a decade in March 2020 due to the pandemic-induced global economic slowdown and declining oil prices, a key export for Malaysia. The Malaysian Ringgit has experienced significant depreciation against the USD over the past decade. Although inflationary pressures are expected to be well-anchored, global economic headwinds remain the primary concern. Following a strong recovery in 2022, economic growth in Malaysia is expected to moderate throughout 2023 and maintain above 3% to the end of the year. From 2021, Malaysia's economy began to recover, with second-quarter GDP growth reaching 7.5%.ĭespite the significant obstacle presented by the pandemic in the short term, Malaysia's economy has shown resilience in the face of various challenges. However, the arrival of the pandemic in 2020 resulted in a sharp 5.6% decline in GDP, marking the worst economic contraction since the 1998 Asian Financial Crisis. Malaysian economy: MYR past performanceįrom 2011 to 2019, Malaysia's economy delivered an impressive annual growth rate of 5.3%. This is due to the narrowing interest rate differentials, which could potentially prompt the return of demand for the Malaysian Ringgit. Looking ahead, the Fed's flagging of a possible rate pause at May’s FOMC meeting suggests the Ringgit might gradually regain its strength against the greenback. From February to May 2023, the exchange rate of USD/MYR jumped by nearly 5%. Uncertainties surrounding the central banks’ monetary policy continued into the new year, driving heightened volatility in the pair. Malaysia’s Ringgit hit an all -time-low against the US dollar in November 2022, following the Federal Reserve’s unprecedented rate hiking cycle.
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