The Australian dollar (AUD) has faced significant headwinds recently, influenced by a combination of domestic and international factors. Analysts noted a drop to a six-week low against the US dollar, closing at US64.24¢, primarily due to the Federal Reserve's reinforced stance on interest rates amidst ongoing trade tensions. This situation led to a projected 2 percent decline for the AUD in July, marking its first monthly retreat since December. The optimism regarding relief from US tariffs on Australian goods provided a temporary boost; however, this was soon overshadowed by persistent concerns around commodity prices and trade relations.
Signs of economic slowdown in China, Australia’s largest trading partner, have raised alarms over the potential decrease in demand for Australian exports. Coupled with recent declines in commodity prices, especially iron ore and coal, the AUD remains under pressure. The Reserve Bank of Australia (RBA) has kept interest rates unchanged, adopting a cautious approach that reflects the uncertain global economic landscape. Recent employment figures showing a decline have only exacerbated the negative sentiment surrounding the currency.
Concerning the Malaysian ringgit (MYR), the outlook appears to be equally challenging. The imposition of a 24% tariff on Malaysian goods by the US has added significant pressure, with market responses reflecting fears of a broader trade war. The MYR, like many emerging market currencies in Asia, has experienced volatility, particularly influenced by these tariff announcements and the consequent diminishing risk appetite among investors.
The AUD to MYR exchange rate currently sits at 2.7448, slightly below its three-month average of 2.7586, indicating relative stability amidst significant fluctuations in the broader market. The AUD has traded within a narrow range of 3.4% between 2.7152 and 2.8074 in recent weeks. On the other hand, oil prices have shown some resilience recently, with values at 69.30 USD, 1.7% above the three-month average, suggesting that fluctuations in oil prices could continue to affect MYR values, given Malaysia's reliance on oil exports.
Overall, as tariff tensions persist and economic indicators signal uncertainty, both the AUD and MYR are likely to remain under pressure. Currency watchers and businesses engaging in international transactions should consider these factors when planning their strategies, as the evolving landscape may lead to further volatility in exchange rates.