Trump win weighs heavily on the Malaysian ringgit
Nov 14 (Reuters) -The Malaysian ringgit has fallen by 3.6% versus the U.S. dollar since Donald Trump's election victory on Nov 6.The clean sweep by the Republican Party in both the House and Senate fuelled the MYR sell-off on Thursday.
The U.S. dollarindex =USD hasextended its bull run to a fresh 2024 high of 106.77 so far.Even as technical indicators are overbought, the Trump trade momentum remains the driving force.
Trump's proposed tariffs are amajor risk for Malaysia due to its open economy and dependence on external trade. Economic growth wouldbe greatly affected if Trump introduces broadtariffs of 10%-20% on all imports to the U.S. and a 60% tariff on Chinese goods. The U.S. and China are Malaysia's main trading partners.
Bank Negara Malaysiaheld its policy rate at 3.00% for the ninthconsecutive time on Nov 6,even though inflation has slowedto 1.85%. However, the central bank may ease in 2025should growth slow due to headwinds from an all-out U.S.-China trade war and if Trump imposes a 20% tariff on Malaysia's exports to the U.S.
USD/MYR has spiked to a more than three-monthhigh ahead of Malaysia's third-quarter GDP data on Friday. A Reuters poll sees growthslowing to 5.3% on a yearly basis, down from 5.9% in the second quarter.
USD/MYR waslast at 4.4860, with a nearby hurdle found at 4.50; a break risks a retest of the April highs near 4.80.
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Catherine Tan is a Reuters market analyst. The views expressed are her own. Editing by Sonali Desai
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