MANILA – Malaysia’s currency is on course for its worst month in more than nine years as investors scale back on risk assets amid concerns over the US election.
The ringgit is down more than 6 per cent against the US dollar in October, putting it on pace for its biggest monthly loss since August 2015. The ringgit traded at 4.39 per dollar on Oct 30.
The ringgit has also weakened against the Singapore currency and is down about 3 per cent in October, with the Singdollar closing at 3.2993 per ringgit on Oct 30.
The renewed strength in the US dollar is battering Asian currencies, almost all of which have come under heavy pressure in October as traders reassess the pace of US Federal Reserve interest rate cuts and avoid risky assets in the run-up to the November US election.
But the ringgit is partly a victim of its own success: a 14 per cent appreciation against the US dollar in the last quarter, which made it Asia’s best performer, ensured there was room for a correction in October, according to OCBC Bank.
“The previous gain was significant; therefore there’s more room for corrective play,” said Mr Christopher Wong, a currency strategist at OCBC. “The ringgit’s sensitivity to the yuan and the yen is also one of the highest in the region, which helps explain why it is suffering more than the rest.”
The Japanese yen is the only currency across Asia that has performed worse than the ringgit in October, losing around 6.3 per cent of its value against the US dollar. China’s offshore yuan has depreciated around 2 per cent.
The fate of the ringgit in the near term rests partly on the results of the US elections. Analysts at OCBC and MUFG Bank predict the currency will strengthen if Democratic presidential candidate Kamala Harris takes the White House, since it will reduce the risks of