As of September 30, 2024, the Malaysian Ringgit (RM)
appreciated to 4.12 against the US dollar, a 39-month high. Asian economists
generally expect the Ringgit to continue to appreciate as the Federal Reserve
is likely to cut interest rates again by the end of the year.
Note that the fundamental reason
for the current appreciation of the Ringgit is not driven by the strong
performance of the domestic economy, but mainly due to capital inflows caused
by the high uncertainty of the US economy in the future.
If the US economy weakens after the
presidential election in November this year, the Fed may reverse its previous
rate cut and instead raise interest rates to attract investors to inject funds
and revitalize the U.S. economy. The resulting decline in capital inflows into
Malaysia could lead to an excess of the Ringgit or even a depreciation.
Therefore, the optimistic view of
local economists on the strengthening of the Ringgit is indeed subject to high
uncertainty.