How Has The Malaysian Ringgit Performed Against Major Currencies In 2024?

The global foreign exchange (FX) market is influenced by a wide array of economic indicators from around the world.

Currency values are impacted by shifts in monetary policies, geopolitical uncertainties, and international trade flows. This influence is particularly pronounced in emerging market (EM) economies, where local currencies are more sensitive to both global and domestic developments, such as oil prices and interest rates.

Malaysia has seen its currency, the Malaysian Ringgit (MYR), experience significant volatility over the past few years. Here’s how it has fared against major currencies in 2024 thus far.

Malaysian Ringgit Posts Mixed Performance Year-to-Date in 2024

Given the complex backdrop, the Malaysian Ringgit faced a turbulent start in 2024, momentarily dipping below 4.80 versus the US Dollar.

So far in 2024, Bank Negara Malaysia (BNM) – the country’s central bank – has maintained its overnight policy rate (OPR) at 3.0% to balance growth objectives while managing inflation effectively.

This approach has allowed the Malaysian economy to perform relatively well against an uncertain global macroeconomic backdrop. Malaysia’s GDP growth for 2024 is projected to be in the range of 4-5%, up from the 3.7% GDP growth in 2023. This anticipated recovery is driven by strong exports, particularly in the electronics and palm oil sectors.

With support from an anticipated cut in the US Fed Funds rate before the end of this year, along with a strong domestic economic outlook, the MYR has recovered in recent months against major global currencies.

MYR vs SGD: Decline of -0.1% (1 SGD = 3.48 MYR)

The MYR saw a marginal decline of 0.1% against the SGD as of the end of May this year. This slight depreciation can be attributed to Singapore’s strong economic fundamentals and the proactive monetary policies of the city-state’s central bank, the Monetary Authority of Singapore (MAS). Singapore’s superior economic performance and higher investor confidence have helped boost the SGD, while the MAS’s effective measures to manage inflation and maintain economic stability have further enhanced its attractiveness to investors.

MYR vs USD: Decline of -2.5% (1 USD = 4.72 MYR)

Despite a challenging start to the year, the MYR managed to pare some of its losses against the US Dollar by the end of May 2024. Nonetheless, it still depreciated by 2.5% against the greenback. This decline is primarily due to the continued high-interest-rate environment in the US, maintained by the US Federal Reserve (Fed) due to higher inflation and strong economic growth. Robust economic indicators in the US, including a strong labor market and elevated consumer spending, have attracted investors seeking higher yields, thus strengthening the USD. Additionally, escalating geopolitical conflicts in the Middle East have driven investors towards the USD, reinforcing its status as a safe-haven asset.

MYR vs EUR: Decline of -0.5% (1 EUR = 5.06 MYR)

Against the Euro (EUR), the MYR has seen a slight decline of 0.5%, due to ongoing optimism surrounding Eurozone economies amid falling inflation data and decent growth. The European Central Bank (ECB) had kept interest rates elevated for much of the year but recently cut its benchmark rate in its June meeting. The Ringgit weakened at the start of the year, reflecting broader trends in emerging market currencies. However, as we progress towards the second half of the year, the MYR is likely to show signs of recovery if the ECB continues to loosen its monetary policy.

MYR vs JPY: Increase of +8.1% (1 MYR = 33.4 Yen)

As of the end of May 2024, the MYR had appreciated significantly against the Japanese Yen (JPY), with an increase of 8.1%. This appreciation is largely due to Japan’s ongoing economic struggles and the Bank of Japan’s (BoJ) persistent implementation of loose monetary policies. Despite the BoJ’s decision in March to end its eight years of negative interest rates, short-term rates have remained close to zero, with limited tightening anticipated in the near term. Consequently, the MYR has strengthened against the JPY, following the broader trend of Yen weakness, making the JPY one of the poorest performers among major currencies this year.

MYR vs GBP: Decline of -2.5% (1 GBP = 5.97 MYR)

The MYR has weakened against the British Pound (GBP) so far this year, with a 2.5% decline. This depreciation is primarily due to the economic challenges faced by Malaysia and the Bank of England’s (BoE) more aggressive monetary policy compared to the BNM. With the BoE’s key interest rate at 5.25%, significantly higher than BNM’s OPR of 3.0%, the disparity has made the GBP more attractive to investors looking for yield, encouraging capital inflows into the UK’s currency relative to the MYR.

Performing Resiliently Amid Higher Rates Worldwide

Despite a challenging start to 2024, the MYR has demonstrated remarkable resilience and has staged a recovery in recent months. Effective economic management and proactive policy interventions have driven this recovery. While the Ringgit has generally weakened against most major currencies, it has notably strengthened against the Japanese Yen. In recent weeks, the MYR has gained further ground, indicating that the recovery may have momentum. With short-term political uncertainties largely resolved, the MYR is starting to attract both global and regional investors as the outlook for its economy continues to be relatively bright.

Read Also: Guide To Multi-Currency Accounts And Wallets In Malaysia

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