The ringgit's uptrend: Why it may continue to strengthen

NST Online

25 Sept 202401:36

Summary

TLDRThe Ringgit has hit multi-year highs against the US dollar, surpassing 4.12, driven by US Federal Reserve rate cuts and China's economic stimulus. These external factors, along with Malaysia's strong 5.9% economic growth in Q2 2024, have bolstered investor confidence. The currency is expected to remain strong against major currencies, supported by solid fundamentals and potential further Fed rate cuts.

Takeaways

📈 The Ringgit has reached a multi-year high against the US dollar, surpassing the 4.12 mark.
🇺🇸 The US Federal Reserve's rate cuts have weakened the US dollar, making the Ringgit more appealing to investors.
🌐 Foreign investments into Malaysia's stock market have increased due to the Fed's actions, boosting the Ringgit.
🔄 Capital inflows into Malaysia create a virtuous cycle, strengthening the Ringgit and attracting more investments.
📉 China's announcement of stimulus measures to strengthen its economy has positively impacted the Ringgit.
🇨🇳 As Malaysia's largest trading partner, China's economic strength directly affects Malaysia's economy.
💹 Malaysia's strong economic growth in Q2 2024, at 5.9%, has bolstered investor confidence in the Ringgit.
🆙 The Ringgit has appreciated against major currencies, including the Euro, Pound, Yen, and Singapore Dollar.
🔮 The Ringgit is expected to maintain its strength, supported by robust economic fundamentals and potential further Fed rate cuts.
🌟 Malaysia's economic performance and external factors like China's stimulus measures are key drivers of the Ringgit's rally.

Q & A

What recent event has caused the Ringgit to reach multi-year highs against the US dollar?
-The Ringgit has reached multi-year highs against the US dollar due to the start of US Federal Reserve rate cuts, which weakened the US dollar and made the Ringgit more appealing to investors.
How did the US Federal Reserve's rate cut affect the Ringgit?
-The US Federal Reserve's 50 basis point rate cut weakened the US dollar, which in turn made the Ringgit more attractive to foreign investors, leading to its appreciation.
What is the role of foreign capital flows in Malaysia's stock market?
-Foreign capital flows into Malaysia's stock market have boosted the Ringgit further, as they create a virtuous cycle of strengthening the currency and attracting even more investments.
How has China's economic stimulus announcement impacted the Ringgit?
-China's announcement of another series of stimulus to strengthen its economy moved the Ringgit to a 16-month high against the US dollar, as China is Malaysia's largest trading partner since 2009.
What is the direct impact of China's strength on Malaysia's economy?
-China's strength has a direct impact on Malaysia's economy, as China is its largest trading partner, and any economic stimulus from China can lead to increased trade and economic growth in Malaysia.
What was Malaysia's economic growth in the second quarter of 2024?
-Malaysia's economy grew by 5.9% in the second quarter of 2024, which beat estimates and bolstered investor confidence in the country.
How has Malaysia's economic growth contributed to the Ringgit's appreciation?
-Malaysia's strong economic growth has contributed to the Ringgit's appreciation by increasing investor confidence and making the currency more attractive.
Against which major currencies has the Ringgit appreciated?
-The Ringgit has appreciated against major currencies including the Euro, Pound, Yen, and Singapore Dollar.
What is the expected future trend for the Ringgit's value?
-The Ringgit is expected to maintain its strength, supported by robust economic fundamentals and potential further Fed rate cuts.
What are the internal factors driving the Ringgit's rally?
-Internal factors driving the Ringgit's rally include Malaysia's strong economic growth, which has surpassed estimates and increased investor confidence.
What are the external factors supporting the Ringgit's strength?
-External factors supporting the Ringgit's strength include the US Federal Reserve's rate cuts and China's economic stimulus measures, which have a direct impact on Malaysia's economy due to its close trade relations with China.

Outlines

00:00

📈 Ringgit Reaches Multi-Year Highs

The Ringgit has reached new multi-year highs against the US dollar, surpassing the 4.12 mark, and is expected to continue rallying due to a combination of internal and external factors. The recent rally was initiated by the US Federal Reserve's decision to cut interest rates by 50 basis points, which weakened the US dollar and made the Ringgit more attractive to investors. This move led to an influx of foreign investments into Malaysia's stock market, further strengthening the Ringgit. Additionally, China's announcement of a new series of stimulus measures to bolster its economy has positively impacted the Ringgit, as China is Malaysia's largest trading partner since 2009. Malaysia's strong economic growth, which exceeded estimates with a 5.9% increase in the second quarter of 2024, has also bolstered investor confidence. The Ringgit has appreciated against major currencies, including the Euro, Pound, Yen, and Singapore Dollar. Looking forward, the Ringgit is anticipated to maintain its strength, supported by robust economic fundamentals and the possibility of further Fed rate cuts.

Mindmap

Keywords

💡Ringgit

The Ringgit is the official currency of Malaysia. In the context of the video, it has reached multi-year highs against the US dollar, breaching 4.12. This signifies that the Ringgit has appreciated in value relative to the US dollar, making it more valuable and attractive to foreign investors.

💡US Dollar

The US Dollar is the official currency of the United States and is often considered a global reserve currency. The script mentions that the Ringgit has breached 4.12 against the US dollar, indicating a strengthening of the Ringgit and a weakening of the US dollar.

💡US Federal Reserve

The US Federal Reserve, often referred to as 'the Fed,' is the central banking system of the United States. The script discusses how the Fed's decision to cut interest rates by 50 basis points has weakened the US dollar, which in turn has made the Ringgit more appealing to investors.

💡Interest Rate Cuts

Interest rate cuts refer to the reduction of interest rates by a central bank, such as the US Federal Reserve. The video script explains that these cuts have weakened the US dollar, contributing to the Ringgit's rally as investors seek higher returns in other markets.

💡Foreign Investments

Foreign investments refer to capital flows from investors based outside a country into that country's financial markets. The script indicates that foreign investments have been attracted to Malaysia's stock market, which has boosted the Ringgit.

💡Virtuous Cycle

A virtuous cycle is a self-reinforcing process that leads to positive outcomes. In the video, it is used to describe how foreign capital inflows into Malaysia strengthen the Ringgit, which in turn attracts even more investments, further strengthening the currency.

💡China's Stimulus

China's stimulus refers to economic measures taken by the Chinese government to boost its economy. The script mentions that China's announcement of further stimulus has moved the Ringgit to a 16-month high against the US dollar, highlighting the direct impact of China's economic strength on Malaysia's economy.

💡Trading Partner

A trading partner is a country with which another country engages in trade. The video script notes that China has been Malaysia's largest trading partner since 2009, and thus China's economic health has a significant influence on Malaysia's economy.

💡Economic Growth

Economic growth refers to the increase in the production of goods and services of an economy over time. The script reports that Malaysia's economy grew by 5.9% in the second quarter of 2024, which has bolstered investor confidence and contributed to the Ringgit's strength.

💡Major Currencies

Major currencies are the currencies of large economies that are widely traded and used as a benchmark in the global financial markets. The script states that the Ringgit has appreciated against major currencies, including the Euro, Pound, Yen, and Singapore Dollar, indicating the Ringgit's overall strength.

💡Robust Economic Fundamentals

Robust economic fundamentals refer to the underlying strengths of an economy, such as low unemployment, strong GDP growth, and stable inflation. The video suggests that the Ringgit's strength is expected to be maintained due to Malaysia's strong economic fundamentals, which provide a solid foundation for the currency's value.

Highlights

The Ringgit has reached new multi-year highs against the US dollar, breaching 4.12.

The rally may continue due to internal and external factors.

US Federal Reserve rate cuts have triggered the Ringgit's recent rally.

A 50 basis point rate cut by the Fed weakened the US dollar.

The weakened US dollar made the Ringgit more appealing to investors.

Foreign investments into Malaysia's stock market have been boosted by the Fed's action.

Capital inflows into Malaysia create a virtuous cycle, strengthening the Ringgit.

China's announcement of stimulus measures to strengthen its economy has positively impacted the Ringgit.

The UN reached a 16-month high against the US dollar following China's stimulus announcement.

China's economic strength has a direct impact on Malaysia's economy as its largest trading partner.

External factors are supported by Malaysia's strong economic growth.

Malaysia's economy grew 5.9% in the second quarter of 2024, beating estimates.

The Ringgit has appreciated against major currencies including the Euro, Pound, Yen, and Singapore Dollar.

The Ringgit is expected to maintain its strength due to robust economic fundamentals.

Potential further Fed rate cuts are expected to support the Ringgit's strength.