The Ringgit was as low as 4.192 vs the US$ in today’s trade (so far). Is the Ringgit free falling?
Source: Google Finance
Factor #1
FEDs expected with ~75% certainty to raise rates by December. Increasing number of FOMC members pushing for rate hikes.
The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve Board that determines the direction of monetary policy.
Factor #2
September crude oil output at highest point ever & OPEC members difficulty agreeing on production cuts specifics. Bad news on oil is bad for the Ringgit.
Factor #3
Malaysia is still being weighed down by political factors & spotlight again on 1MDB from Swiss & Singapore authorities.
Summary
The USD is continuing to strengthen. The major woes of the Malaysian ringgit though is compounded by continued low oil prices & political issues.
Risks for US Dollar
So far an unprecedented US$ strengthening as Euro & Japan undergo stimulus. There are however 2 major risks for the USD
- US stock market crashes bring down the dollar with it
- China Yuan becomes a reserve currency undermining the importance of the dollar
Note: At time of writing, the US$ has fallen slightly due to UK sterling rebounding after the flash crash
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