The recent performance of the Malaysian Ringgit (MYR) against the Indian Rupee (INR) highlights a contrasting economic landscape for the two currencies. The MYR has appreciated to 22.09 against the INR, which is 4.0% above its three-month average of 21.25. This increase is underpinned by several macroeconomic factors, including a robust economic outlook for Malaysia, a positive trade balance, and significant foreign direct investment (FDI) inflows. Analysts credit these developments to the Malaysian government's fiscal consolidation efforts and strategic trade agreements, such as those made during the recent ASEAN Summit, which bolster investor confidence and enhance trade prospects.
In contrast, the INR has recently hit a historic low of 90.42 per U.S. dollar, reflecting a 5% depreciation over the past year. The Indian currency is under significant pressure due to a widening trade deficit, exacerbated by the imposition of higher tariffs on Indian exports by the U.S. Moreover, substantial foreign investment outflows—amounting to nearly $17 billion—have contributed to the rupee's decline. The Reserve Bank of India's recent policy shift toward allowing a weaker rupee suggests a strategic move to manage volatility rather than to maintain a specific exchange rate target.
Furthermore, fluctuations in oil prices, which are vital to Malaysia's economy, may impact the MYR. Recent data indicates that oil is trading near 30-day lows at around 61.20 USD, which is 4.9% below its three-month average. Given that oil is a primary export for Malaysia, sustained lower prices could influence MYR performance in the long term.
Analysts suggest that the MYR's recent strength, combined with the INR's downward trends, could see the MYR continue to appreciate against the INR unless significant changes occur in the underlying economic conditions or geopolitical relations.
