(11 March 2024 – Malaysia) The Malaysian Ringgit (MYR) remains under severe pressure after sliding to trading levels last witnessed during the worst of the 1997 Asian Financial Debt Bubble Crisis.
The country’s central bank, Bank Negara Malaysia, is actively working to step in and prop up the MYR by selling off USD reserves while Malaysian government officials are seeking to prevent further fire selling and restore confidence in the currency by limiting capital outflows and incentivising the repatriation of capital abroad.
The ringgit touched an almost three decade low of 4.7965 against the USD on February 20, perilously close to the psychological 4.8850 mark last reached in January 1998.
Norman Goh and Tsubasa Surugaa report for Nikkei Asia that as an export-driven country, a weaker currency would typically benefit the Malaysian economy however that also means higher costs for importers, raising prices of goods and services.
“Despite Malaysia's external balance being robust, the public debt level is relatively high among Asian emerging economies, while its fiscal position continues to deteriorate since the COVID-19 pandemic” Commented Dai-Ichi Life Research Institute Chief Economist, Toru Nishihama.
“For Malaysians, the most serious effect is inflation, especially the cost of food due to high imports,” said University of Nottingham Asia Research Institute Malaysia Honorary Research Associate, Bridget Welsh.