Ringgit Rises as Strong Q4 Growth Boosts Outlook
The ringgit opens higher against the US dollar and Asean currencies due to stronger Malaysia’s gross domestic product (GDP) growth in the final quarter (Q4) of 2024, said an analyst.
Market Reaction
At 8am, the ringgit surged to 4.4265/4.4350 versus the US dollar compared to Friday’s close of 4.4310/4.4385.
Economic Factors
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said Malaysia’s GDP growth in Q4 2024 was higher than advanced estimates, suggesting that the Malaysian economy remained resilient.
Fiscal Consolidation
"The fiscal deficits for last year were lower at RM79.2 billion or 4.1% of GDP versus the government estimates of RM84.3 billion or 4.3% of GDP," he noted.
"This indicated that the fiscal consolidation exercise has shown a promising result, which can be credit-positive from the credit rating agencies’ point of view," he added.
Ringgit Outlook
Therefore, Mohd Afzanizam projected that the ringgit could pierce the immediate support level of 4.43 today in light of the latest development.
Weaker US Consumer Spending
He also noted that the ringgit is poised for positive starts today amid signs of weaker consumer spending in the US.
"The latest retail sales number in the US came in lower than expected to -0.9% month-on-month in January against consensus estimates of -0.1%," he added.
Currency Movement
The ringgit traded mostly higher against major currencies. It appreciated against the euro to 4.6425/4.6514 from 4.6437/4.6515 at Friday’s close and advanced versus the British pound to 5.5708/5.5814 from 5.5769/5.5863, but it slipped vis-a-vis the Japanese yen to 2.9124/2.9183 from 2.9048/2.9099 at Friday’s close.
Asean Currencies
The local note traded higher against Asean currencies. The ringgit rose against the Singapore dollar to 3.3041/3.3109 from 3.3055/3.3113 and increased against the Thai baht to 13.1152/13.1485 from 13.1761/13.2059 previously. It also strengthened vis-a-vis the Indonesian rupiah to 272.3/273.0 from 272.6/273.2 and climbed against the Philippine peso to 7.65/7.67 from 7.66/7.68 at Friday’s close.
Conclusion
The ringgit’s strong performance is a positive sign for the Malaysian economy, indicating a resilient growth and a promising outlook. The currency’s appreciation against major currencies and Asean currencies also reflects the country’s stable economic position.
Frequently Asked Questions
- What is driving the ringgit’s strength?
The ringgit is rising due to stronger Malaysia’s gross domestic product (GDP) growth in the final quarter (Q4) of 2024. - How did the ringgit perform against major currencies?
The ringgit traded mostly higher against major currencies, appreciating against the euro and British pound, but slipping against the Japanese yen. - How did the ringgit perform against Asean currencies?
The ringgit traded higher against Asean currencies, rising against the Singapore dollar, Thai baht, Indonesian rupiah, and Philippine peso.