Ringgit, Emerging Currencies Poised To Gain As Greenback Weakens Amid US Shutdown

KUALA LUMPUR, Oct 3 (Bernama) -- Emerging market currencies, including the ringgit, are expected to benefit from a possible further weakening of the greenback amid economic uncertainty stemming from the US government shutdown.

Credit Guarantee and Investment Facility principal investment specialist Khoo Jo Ee said the shutdown could delay the release of key US economic data, fuelling uncertainty and shaping expectations of further interest rate cuts by the US Federal Reserve (Fed).

He said the stability of the ringgit is viewed as a sign of market confidence and could reinforce demand for domestic bonds.

“There is a strong value proposition for companies to issue local currency bonds where rates remain favourable, instead of taking on foreign-currency debt, which poses currency mismatch risks,” he said at one of the sessions today at the RAM Forum 2025: Building Resilience and Future-Proofing Amid Shifting Sands.

He was speaking at a session entitled “Everything Everywhere All At Once, Risks and Opportunities in the Real and Financial Economy”, with Affin Bank Bhd group chief economist Alan Tan as moderator.

Khoo noted that while the shutdown is likely to introduce volatility into global financial markets with potential impact on Malaysia’s capital market, the domestic market remains supported by solid fundamentals.

These include fiscal consolidation efforts, a current account surplus, and a developed Islamic finance infrastructure, making it attractive to institutional investors seeking local-currency assets, he added.

With deep liquidity and strong institutional participation, he said Malaysia’s bond and sukuk markets are expected to provide corporates with ample access to funding, while cushioning them from potential spillovers of US fiscal uncertainty.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said with the United States accounting for the world’s largest consumer market, Malaysia must continue diversifying its export destinations amid slowing growth in both the US and China.

He said the government has already signalled efforts to broaden market access through free trade agreements (FTAs) and regional cooperation frameworks, but challenges remain in ensuring that local businesses, particularly micro, small, and medium enterprises (MSMEs) can benefit.

“Negotiation is one thing, but implementation may take time. Along the way, economic shifts, changing business practices, and evolving regulations mean firms must continuously build capacity, with government support to ease the process. In the grand scheme of things, tariff and non-tariff measures remain central to trade discussions,” he added.

Mohd Afzanizam noted that while the US has become more hostile and negotiations may sometimes be overlooked, what matters more is how countries adapt to such changes. “This is where opportunities arise for financial institutions to support and finance firms in their expansion,” he added.

-- BERNAMA