Ringgit sees biggest decline in nine years amid US election concerns
Malaysia’s currency, the ringgit, has suffered its sharpest decline in almost nine years amid investor concerns over the upcoming US presidential election. The sell-off got here as investors moved away from riskier assets, including emerging markets, amid growing global uncertainty.
In October, the ringgit fell greater than 6 percent against the US dollar, marking its biggest monthly loss since August 2015. On Wednesday, October 30, the ringgit was trading at around 4.39 per US dollar.
The recent strengthening of the US dollar has put significant pressure on most Asian currencies, including the ringgit. This pressure is essentially as a result of the Federal Reserve’s market reassessment of potential rate of interest cuts, which has reduced the attractiveness of emerging market assets.
Global uncertainty increases pressure on the Ringgit
Increased uncertainty across the US presidential election has made the situation worse.
Investors have gotten increasingly cautious, avoiding riskier assets within the run-up to this key political event. As a result, the ringgit, like many other Asian currencies, was under significant pressure throughout October.
Read also: Malaysia joins BRICS: strengthens its global voice and expands market reach
Ringgit Short-Term Prospects Linked to US Election Results
According to analysts, the short-term behavior of the ringgit will likely be closely linked to the consequence of the US elections. Report by Business Times highlighted that OCBC and MUFG Bank analysts predict that the ringgit may rebound if Democratic presidential candidate Kamala Harris wins the election.
Harris’ victory is predicted to ease concerns about trade tariffs that might negatively impact Asian economies, including Malaysia.
MUFG forecasts that the ringgit could strengthen to 4.12 per dollar by the tip of the yr, while OCBC predicts an increase to 4.22 per dollar. These forecasts reflect optimism that favorable decisions may lead to more stable global trade policies, which is able to ultimately profit Asian currencies.
