The Malaysian Ringgit (MYR) is currently experiencing a mixed performance, influenced by both domestic monetary policy and global economic developments. Recently, Bank Negara Malaysia (BNM) took a significant step by cutting the Overnight Policy Rate by 25 basis points to 2.75%. This marks the first reduction in five years, aimed at bolstering economic growth amid ongoing global trade tensions and geopolitical uncertainties.
In addition, the introduction of a 24% tariff on Malaysian exports by the U.S. has raised concerns over the potential impact on Malaysia's economic growth. BNM Governor Abdul Rasheed Ghaffour has noted that while the tariffs may pose challenges, the diversification of Malaysia's economy could mitigate some of these impacts. However, external factors, particularly policies from the U.S. Federal Reserve, remain critical determinants of the MYR's performance. Markets are closely monitoring these influences, as highlighted by Deputy Finance Minister Datuk Seri Ahmad Maslan.
Current exchange rates reflect a somewhat stable season for the MYR against major currencies. The MYR to USD is at 7-day highs near 0.2377, just above its 3-month average, showing resilience within a stable range of 2.1% from 0.2338 to 0.2387. Similarly, the MYR to EUR sits at 0.2026, close to its 3-month average, and has traded within a stable 3.2% range. The MYR to GBP is a touch higher than its 3-month average at 0.1764, while the MYR to JPY is also just above average at 34.98, having maintained a stable trading pattern.
However, the ringgit's strength could be challenged by the decline in oil prices, which are trading near 90-day lows at 65.35—4.0% below their 3-month average of 68.05. This downturn, influenced by market volatility, poses a potential threat to Malaysia's export-driven economy, as it is heavily reliant on oil revenues.
Overall, the MYR’s trajectory remains vulnerable to external pressures and domestic reforms aimed at improving economic sustainability. Analysts suggest that businesses and individuals engaged in international transactions should stay alert to these fluctuating dynamics, as they may present both risks and opportunities in managing forex exposure.
