PM Expresses Concern Over Ringgit Weakness

Malaysian PM has commented on the weaker ringgit backdrop. The PM said the fall earlier this week (back to lows since 1998) was concerning and that the government has asked the central bank to monitor the situation.

• Spot USD/MYR is little changed today, last near 4.7760, which comes after the pair briefly traded above 4.8000 earlier in the week. Note all time highs back in 1998 for the pair were at 4.8850.
• Comments from BNM, the Malaysia central bank, earlier in the week stated the weakness didn't reflect the improving outlook for the economy.
• Other comments noted that the country didn't need to repeg the currency (see this BBG link).
• The ringgit is the second worst performer in EM Asia FX YTD, down nearly 4% (with baht off 5.2% the worst performer).
• MYR's low carry and uncertainty around the growth outlook, may keep offshore inflows limited, at least until the Fed cycle turns more dovish.
• Still, with the currency now drawing the PM's focus, we may see the 4.8000 level as somewhat of a near term line in the sand. On the downside, note the 20-day EMA sits back near 4.7600.