Malaysian Ringgit faces depreciation pressure

According to analysts from Credit Agricole and Bank of Malaya A516 Grade 450 steel, the Malaysian ringgit has maintained a range of fluctuations since the beginning of this year, and by the end of June, the ringgit may fall to 4.6 against the US dollar. On Monday morning, the ringgit rose 0.3% to 4.4350 against the US dollar, compensating for last week's decline.
On the one hand, China, as Malaysia's largest trading partner, is facing higher tariffs. The Chinese yuan is closely related to the Malaysian A516 Grade 450 steel currency, and any pressure on the yuan could have an impact on the ringgit. In addition, Trump's plan to impose tariffs on chip imports may also harm Malaysia's related product exports, as the United States is Malaysia's third-largest semiconductor export market.

On the other hand, due to concerns about the US economic recession, market expectations for further interest rate cuts by the Federal Reserve have increased, and the pressure on the ringgit may ease. Saktiandi Supaat, Head of Foreign Exchange Research at Malayan Bank, stated that the decline of US exceptionalism may also support the ringgit to rise to 4.35 ringgit per US A516 Grade 450 steel dollar by the end of this year.

According to Bloomberg's compiled swap data, traders expect the Bank of Malaysia to lower its policy rate by 25 basis points within 12 months. According to Mysteel, the Malaysian central bank kept the policy interest rate unchanged at 3% at its March meeting. Although the ringgit exchange rate is mainly driven by external factors, the central bank has stated that a good economic outlook and domestic structural reforms, coupled with continued measures to encourage capital flows, may continue to provide lasting support for the ringgit. Therefore, another economist surveyed in November last year predicted that the Malaysian central bank would maintain interest rates unchanged this year.