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KUALA LUMPUR: With the 2021 Budget expected to be the most challenging amid uncertainties, clearer signs of economic recovery are needed for the ringgit to rise.
Bank Muamalat Malaysia Bhd economist Izuan Ahmad said that whether the ringgit would strengthen would depend on the actual success factors related to containing Covid-19.
“At this time, it is difficult to measure the potential bullish momentum of the ringgit, although it could become somewhat clearer when the latest economic facts and figures are released, most of which are expected to be in a better position given the current situation in the country . road to recovery, “he told Bernama.
He said a weaker ringgit against the US dollar would boost the country’s export sector and definitely benefit players like rubber glove makers, who are also taking advantage of increased global demand due to the pandemic.
On the other hand, it would have the opposite impact on those who depend on imported materials or parts.
“As such, the 2021 Budget could contain measures that would work both ways amid the current uncertainties of global economic and financial conditions, that is, depending on the bullish or bearish momentum of the local currency.
“For the remainder of 2020, the performance of foreign trade could remain a challenge, as it is deteriorating from the Covid-19 outbreak around the world,” he said.
Despite some recovery in the number of cases worldwide, Izuan still has an apparent downside risk of a new wave of cases in most countries, some of which are important trading partners of Malaysia, including the EE. USA and China.
As such, moderate demand could affect the overall performance of the country’s foreign trade towards the end of the year, and many research houses expect a contraction in the performance of exports.
Overall, he said the 2021 Budget is expected to be one of the most challenging in recent years, as it is a difficult task for the government to formulate a satisfactory budget amid uncertainties, which are now exacerbated as they begin to evidence of political instability appears. his ugly head.
“As such, the measures expected under Budget 2021 would likely focus more on the well-being of individuals and segments affected by the ongoing Covid-19 pandemic and the resulting lockdowns.
Malaysia’s budget for 2021 will be presented this Friday, after being postponed from October 2.
The ringgit rose to 4.13 against the US dollar on September 15, its highest level in seven months.
At present, the local unit stands at the level of 4.14 – 4.16 against the dollar amid uncertainties ahead of US Election Day on November 3.
In September, Malaysia’s trade surplus increased 149.3 percent year-on-year to RM21.97 billion, the largest trade surplus ever recorded for the month.
Total trade expanded 5.5 percent to RM 155.88 billion during the month compared to September 2019, with exports rebounding from double-digit growth of 13.6 percent to 88, 93 billion ringgit, while imports decreased 3.6% to 66.96 billion ringgit. .
As for the third quarter of 2020, the trade surplus balance widened to RM60.4 billion from RM27.6 billion in the second quarter, representing a growth of 68.4 percent over the same period of the year. past. -Called
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