The Malaysian ringgit fell to its weakest since 2016. The currency breached the RM4.50 mark against the US dollar. However, the ringgit is not the only Asian currency that crumbled.
The Japanese yen fell by 0.72% against the US dollar. The Chinese Yuan fell by 0.35%. The Taiwanese dollar fell by 0.11% against the greenback. US Federal Reserve implemented drastic measures to combat inflation. One of the measures is hiking interest rates.
Malaysian ringgit fell to its weakest
As a result, US dollar has been gaining strength. US is now experiencing wage growth, and this keeps the greenback bulls hopeful. There are many indicators of the strength of US dollars. One of the indicators is the US Dollar Index.
The US Dollar Index reached a two-decade high, which is a clear indication that the greenback is growing stronger. Investors are expecting the US Federal Reserve to continue to be aggressive in order to reduce the negative impacts of inflation.
The aggressive monetary tightening measures will continue to improve the US dollar strength, while the call for a general election in Malaysia has caused uncertainty about the country’s political stability.
Ringgit depreciated against other major currencies
The ringgit depreciated against not only the US dollar but other major currencies as well. According to Bloomberg, the ringgit fell by 0.92% against the British Pound, 0.1% against the Singapore dollar and 0.41% against the Euro.
On the other hand, the ringgit strengthened against the Japanese yen and the Australian dollar. Bank Negara Malaysia may make a decision to hike the overnight policy rate to prevent the further weakening of the Malaysian ringgit in its upcoming meeting.