Since the Fed lowered interest rates by 50 basis points, the ringgit saw a noticeable strengthening to below the 4.2 mark. However, the trend didn’t last, and the ringgit weakened back to the 4.3 range. Major news outlets attribute this to stronger U.S. job numbers and a significant drop in FCA (Foreign Currency Account).
There has been little mention of the massive stimulus package announced by the PBOC on 8th October 2024, where China is expected to release between 1.5 trillion to 3 trillion yuan over the next 12 months. Trade between Malaysia and China favors Malaysia, with a trade surplus. If the RMB depresses (due to the easing), theoretically, the Malaysian Ringgit (MYR) might also face downward pressure if there’s a correlation in market sentiment or if traders expect Malaysia’s central bank, Bank Negara Malaysia (BNM), to not intervene or to mirror China’s policy actions due to trade relations or regional economic integration.
Could it be another reason why the Ringgit is weakening recently?
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