10th day rally, ringgit is on a roll. What’s next?

10th day rally, ringgit is on a roll. What’s next?

A good friend who is a retired senior manager who loves property and travelling the world told me this good news yesterday. Ringgit has strengthened. Anyway, it depends on whether we like to see it as ringgit has strengthened or the USD has weakened, right? Truth is, ringgit remains a very ‘small’ currency and there’s no way we can influence the movement of the world’s largest reserve currency by far. So, if you have been reading my articles you would know that I always think it’s more of USD strengthening or weakening versus putting the ringgit as the main point.

Ringgit on a roll?

Yes, today is 2nd August 2024. Ringgit is on the 10th day rally streak. From some not-so-rosy days since the start of 2024, it’s now on a roll. Just roughly 10 days ago, on 21st July 2024, it was at US$1 to RM4.688. Image below from xe.com Analysts were always saying that ringgit is undervalued versus that green coloured currency but they say only mah. Until the recent 10 days…

Article in freemalaysiatoday.com Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the US Institute for Supply Management (ISM) index for the manufacturing sector fell to 46.8 points in July, lower than the consensus estimate of 48.8 points.

“Claims for jobless insurance in the US were also rising to 249,000 last week from 235,000 previously, suggesting that the labour market is weakening.

These (indicators) seem to support the view that the Fed would cut the rates in September as it needs to ensure the economy would be able to achieve a soft landing in growth after maintaining a restrictive monetary policy stance for quite some time, he noted.

Afzanizam also said, “After experiencing a sharp appreciation against the greenback, we still feel that the ringgit is undervalued and, therefore, the upside potential is still very much visible.” Please do refer here for the full article: Article in freemalaysiatoday.com

What’s next?

It’s very important to come back to reality on the ground. The prices of goods and services which has gone up when people claim ‘costs went up because ringgit was weak’ will not be coming down. It means we need to earn more regardless of whether ringgit depreciates or appreciates. Unless of course there’s a financial crisis, then maybe the price could go down. However, I am not one of the ones who will be rooting for another financial crisis. Are you?

For working people, whether ringgit moves up or down, that job can disappear or doubled quickly because these days, it’s really a globalised world that we live in. A sudden increase in demand for a certain goods in the US may trigger a huge order for a factory here in Malaysia and a huge order for raw supply from Indonesia for example. So the Malaysian factory has to quickly hire a lot of people and the mining company in Indonesia may have to quickly hire a lot of new people.

Everyone’s happy until suddenly the order from the US drops because something else went viral and now the Malaysian factory and the Indonesia mining company may have to retrench their newly hired employees just 6 months ago. These people who used to have money to buy things have to now find another job which pays them.

Oh yeah, with the appreciating ringgit, perhaps it’s time to go travelling too. 🙂 It’s always possible to go Japan but now it’s possible to go to more countries too. Want to know how’s ringgit versus many major currencies? Here’s the earlier article:

Cheers.

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