The Asean+3 Macroeconomic Research Office (AMRO) expects Malaysia’s ringgit to remain strong as one of the region’s best-performing currencies, according to chief economist Hoe Ee Khor. He noted that Malaysia is attracting substantial capital inflows, and some Malaysian investment corporations are repatriating their investment earnings, which has helped support the currency. “Along with that, the cut in the US Federal Reserve rate plays a role.
One of the key drivers of exchange rates is carry trade, which reflects the difference between US interest rates and the Malaysian policy rate.” Despite a recent slight depreciation, AMRO remains optimistic about the ringgit’s continued resilience, with Malaysia’s GDP growth projected to maintain at 4.7% and potentially increase to 4.9%, driven by robust investments and low inflation.
Ringgit’s Strong Momentum
As Malaysia prepares to unveil Budget 2025 on October 18, Hoe suggested that the government prioritize rebuilding fiscal space and enhancing economic competitiveness. He stated, “This is a good opportunity to consolidate and rationalise the subsidies that were implemented to control inflation,” advocating for more targeted subsidies.
Hoe emphasized the need for increased investment spending to improve the economy’s competitiveness, particularly in the manufacturing sector. He also pointed out, “There is a shortage of skilled labour, and that’s another area where we believe the government could do more (to address this gap) and meet the demand of the evolving economy.”
