Malaysia: Malaysian ringgit continues to weaken in 2015, hits multi-year low in March
March 18, 2015
The Malaysian ringgit (MYR) hit a multi-year low of 3.71 MYR per USD on 16 March, which was 3.5% weaker than on the same day of the previous month and 13.0% weaker on an annual basis. Moreover, the ringgit was the second poorest performing Asian currency in Q1 2015 after the Indonesian rupiah. The MYR has depreciated 6.0% against the USD so far this year, and the expected upcoming hike in the U.S. Federal Reserve’s interest rates will likely lead the currency to weaken further in the coming months.
The depreciation of the Malaysian ringgit began in the second half of 2014 when global prices for oil started to decline. As a net oil exporter, Malaysia has particularly felt the impact of the fall in energy prices. Exports decelerated markedly throughout 2014 and that led to a significant deterioration in external accounts, which translated into a weaker ringgit. On top of this, the MYR has also been affected by the strengthening of the U.S. dollar, resulting from solid economic growth in the U.S. Against that background, the Malaysian ringgit has been losing value uninterruptedly since August last year: from a peak of 3.16 MYR per USD on 22 August 2014, the currency depreciated 17.0% to a low of 3.71 MYR per USD on 16 March 2015.
Author: Cecilia Simkievich, Economist