Malaysia Currency Exchange Rate

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The impact of the September 20, 2023 FOMC decision to no rate hike on the Malaysian currency forex exchange rate is likely to be mixed. On the one hand, the decision could lead to a weakening of the ringgit against the US dollar, as investors may seek out higher-yielding assets in other markets. On the other hand, the decision could also support the ringgit, as it could reduce the risk of capital outflows from Malaysia.

The following factors could lead to a weakening of the ringgit:

• The US Federal Reserve is widely expected to continue raising interest rates in the coming months, in an effort to combat inflation. This could lead to a stronger US dollar, as investors seek out safe-haven assets.
• Bank Negara Malaysia, has been reluctant to raise interest rates, as it is concerned about the impact on the country’s economic growth. This could lead to a widening interest rate differential between Malaysia and the US, which could make the ringgit less attractive to investors.
• Malaysia is a net commodity importer, and the recent rise in commodity prices has widened the country’s current account deficit. This could also weigh on the ringgit.

However, the following factors could support the ringgit:

• The decision by the US Federal Reserve to keep interest rates unchanged could reduce the risk of capital outflows from Malaysia.
• The Malaysian economy is expected to grow at a healthy pace in 2023, projected to expand close to the lower end of the 4.0% to 5.0% range in 2023. In addition, supported by strong domestic demand and exports, this could boost the ringgit.
• Malaysia’s central bank has a number of tools at its disposal to support the ringgit, such as intervening in the foreign exchange market and raising capital controls.

Overall, the impact of the September 20, 2023 FOMC decision to no rate hike on the Malaysian currency forex exchange rate is likely to be mixed. The direction of the ringgit will likely depend on a number of factors, including the pace of US interest rate hikes, the performance of the Malaysian economy, and the actions of Bank Negara Malaysia.