The Malaysian ringgit traded around 4.10 per USD in late June, hovering near its weakest level since November, as expectations of further US interest rate hikes continued to bolster the dollar and pressure emerging-market currencies. Political uncertainty at home also increased ahead of two state elections. The ringgit has now depreciated about 4% so far this month.
In response, Bank Negara Malaysia signaled that it would intensify measures to stabilise the currency, including initiatives to attract foreign capital inflows and to encourage state-linked enterprises and corporates to repatriate overseas earnings. The central bank also stressed that the latest capital outflows largely reflected portfolio rebalancing following earlier gains in the ringgit, rather than any weakening in Malaysia’s economic fundamentals. The country’s underlying economic profile is still assessed as strong, and the onshore foreign-exchange market continues to operate smoothly.
