Beyond the yen, ringgit’s free fall the one to watch

Malaysia’s currency is Asia’s second-worst performer this year, a sell-off the central bank insists is unjustified given underlying fundamentals

Malaysia’s central bank is under pressure to steady the flagging national currency, the ringgit, which in recent days fell to new multi-decade lows against the US greenback and neighboring Singapore dollar.

Analysts say Bank Negara Malaysia (BNM) now faces a trade-off between raising rates and stifling an already sagging domestic economy or posing risks to financial stability by failing to act. Malaysia’s offshore borrowings, widely denominated in US dollars, amounted to 30 billion ringgit ($6.2 billion) as of August 2023.

Like other emerging market currencies, the ringgit has depreciated this year against a strong US dollar. But the extent of the slide – now the worst performer in Asia after the Japanese yen – has, according to BNM Governor Abdul Rasheed Abdul Ghaffour, belied Malaysia’s otherwise strong economic fundamentals and resilient banking sector.

“We are not in a crisis. It is different from what we experienced in the past,” Abdul Rasheed told reporters earlier this week, referring to the 1997-98 Asian financial crisis when the ringgit hit a benchmark low of 4.88 ringgit to the US dollar in March 1998.

The currency has in recent days tumbled to its lowest levels since, slipping to 4.79 to the US dollar on October 23 and hovering at 4.77 at the time of publication.

Read the full story at Asia Times.

Nile Bowie is a journalist and correspondent with the Asia Times covering current affairs in Singapore and Malaysia. He can be reached at nilebowie@gmail.com.

Singapore’s economy in a geopolitical squeezebox

City-state averts recession but languid growth would take a new inflationary hit if Gaza war spikes global oil prices

After narrowly avoiding a technical recession earlier this year, recent data shows better-than-expected but still sluggish growth in Singapore. But the city-state’s trade-reliant economy could decelerate for the remainder of this year and even into 2024 if the United States and Chinese economies underperform baseline forecasts, say analysts.

Gross domestic product (GDP) rose 0.7% year-on-year in the July to September quarter according to according to advance estimates recently published by the Ministry of Trade and Industry (MTI). On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 1%, ahead of economists’ forecasts and faster than the tepid 0.1% growth in the preceding quarter.

In a policy statement on October 13, the Monetary Authority of Singapore, the city-state’s central bank, cited “muted” growth prospects in the near term and expectations of full-year growth to come in “at the lower half” of the official forecast range of 0.5% to 1.5%. It added that growth in Singapore’s major trading partners should gradually pick up by the second half of next year.

Analysts at research firm BMI Research were less optimistic of a 2024 rebound in a research note reviewed by Asia Times. The independent monitor issued a downward revision to Singapore’s full-year growth forecast to 0.8% from 1.1% and sees a further deceleration to 0.5% in 2024, owing to slowdowns expected among Singapore’s major trade partners and fiscal consolidation.

Read the full story at Asia Times.

Nile Bowie is a journalist and correspondent with the Asia Times covering current affairs in Singapore and Malaysia. He can be reached at nilebowie@gmail.com.