Why ringgit is falling

The prime minister also said Malaysia remains "open for business" and the emergency period will give the country "much needed calm and stability. Muhyiddin has a razor-thin majority in parliament, and has been facing pressure from within his ruling coalition to step down and call for a snap election. He had in October also sought a state of emergency — a move that many analysts considered an attempt to preserve his political standing.

The king rejected the request back then. The state of emergency comes after Malaysia's cases of Covid surged in recent months. Last week, the number of reported daily cases jumped above 3, for the first time since the outbreak, according to data compiled by Johns Hopkins University. Malaysia has reported more than , cumulative cases of Covid and deaths so far, according to Hopkins.

Forex 14h ago Ringgit lower as greenback gains on higher inflation. The ringgit is currently hovering at RM4. Year-to-date, it has declined 4. Lee Heng Guie SERC Externally, he notes, the bouts of financial volatility due to United States Federal Reserve monetary policy as well as heightened risk aversion to emerging market economies, including Malaysia, have also weighed down the ringgit.

CLICK TO ENLARGE On the flip side, better macro clarity as the National Recovery Plan is fast tracked, supported by the reaching of herd immunity; successful containment of the pandemic; a responsible Budget to ease concern about fiscal and debt sustainability; and the gradual removal of domestic monetary accommodation, probably in the second half of , are some of the factors that could lift the ringgit.

High-risk premium According to Sunway University economics professor Yeah Kim Leng, persistent ringgit weakness over the last decade cannot be explained by economic fundamentals alone. Manokaran Mottain Alliance The recovery in global oil prices is also expected to boost the ringgit strength, he says.

Government role Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid expects the ringgit to remain an underperformer against major currencies, particularly the US dollar. Bank Islam Mohd Afzanizam He notes the greenback is expected to remain firm on expectations that the US Federal Reserve will begin tapering its asset purchases next year and eventually raise interest rates amid the ongoing economic recovery and rising inflationary pressure in the United States.

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