The Malaysian ringgit is facing pressure due to the strengthening US dollar and the weakening Chinese yuan. Analysts suggest this trend could continue in the near term, especially with the upcoming US presidential inauguration.
The foreign exchange market is turbulent again with the ringgit being kept in check by regained strength in the US dollar. This is coupled with the renewed weakness in China ’s yuan with Beijing signalling its readiness for monetary easing to counteract its economic slowdown .
This situation is pressing the ringgit to test its lows in the last one month and the local currency appears now to have prematurely ended its strong recovery path which was widely seen by the market last year when it gained 2.7% against the US dollar. Despite its strong economic fundamentals, the ringgit’s fate in the near term appears to be closely linked to currency action of major trading partners: China and the United States. The local unit has weakened by about 0.91% since the beginning of 2025, trading at the 4.5130 level against the greenback yesterday as the political risk factor in Europe, China’s deflationary worries and the yen’s weakness sent investors into the dollar. The trend appears to point towards the ringgit remaining soft for the time being especially with the upcoming inauguration of Donald Trump which could signal major changes to its trade policies and market access and in the way Washington deals with trading partners and allies in the region. But the local unit’s weakness is not isolated and appears to be a regional phenomenon as Asian currencies including the Philippine peso and Thai baht having also seen a similar magnitude of decline against the dollar since the new year. Fund managers gave further insights into the recent currency movements pointing out that the dollar’s recent strength is mainly due to the significant rise in real interest rates there. This causes the real interest rate differentials between the United States and Malaysia for example to widen, thus heightening the appeal of the dollar even more
Finance Currency Ringgit US Dollar China Yuan Economic Slowdown Monetary Policy Interest Rates
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