The Malaysian ringgit has seen a recent rise, positioning it as Southeast Asia’s best-performing currency. Prime Minister Datuk Seri Anwar Ibrahim stated that despite this improvement, the ringgit remains undervalued at RM4.10 per US dollar. He emphasized the importance of allowing market forces to dictate the currency's value, suggesting that the ringgit's true worth has yet to be realized [d39707b7].
This sentiment comes amidst a backdrop of significant economic challenges. The ringgit has depreciated considerably over the years, with a notable decline against other regional currencies. As of August 2024, RM1 equals S$0.30 and B$0.30, reflecting a steep drop since the US dollar peg was removed in 2005. The depreciation has been attributed to various factors, including price hikes, wage stagnation, and shifts in productivity, leading to a 31% drop against the Singapore dollar and 24% against the Thai baht [98fe9034].
Despite these challenges, BMI Country Risk & Industry Research has revised its end-2024 forecast for the ringgit to RM4.00 per US dollar, a notable improvement from the previous RM4.55 projection. Some analysts even predict a potential rise to RM3.55, indicating optimism about the ringgit's future performance [d39707b7].
Anwar acknowledged the concerns among exporters regarding the undervalued ringgit but pointed out that this situation benefits Malaysia's trading economy by making exports more competitive. The government has emphasized the Madani Economy framework to boost investor confidence and attract foreign direct investments, which are projected to reach RM300 billion by 2025 [30f7d111].
Trade has also shown substantial growth, with a 9.8% increase from January to July 2024, reaching RM1.652 trillion. However, the strength of the ringgit may negatively impact exports, particularly in the electronics sector. Kenanga Research maintains a neutral-to-bullish outlook on the ringgit for the upcoming weeks, suggesting that it may gravitate towards its five-day exponential moving average of 4.486 [b97d3cdc].
As the ringgit continues to fluctuate, the focus on economic vibrancy and quality of life is becoming increasingly important. Anwar has urged the public to engage with his statements regarding the economy, highlighting the need for a comprehensive understanding of the context behind economic changes [b97d3cdc][98fe9034].