Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
The Malaysian ringgit is showing strong signs of recovery, driven by robust economic growth and expectations of an imminent interest rate cut by the Federal Reserve (Fed).
After hitting a 26-year low in February, the ringgit is now less than 1% away from recovering its losses for the year. Oversea-Chinese Banking Corp predicts that the ringgit will appreciate to 4.60 per dollar by mid-2025. As of early Wednesday, the local currency rose 0.2% against the US dollar.
Factors Supporting the Ringgit's Rebound:
State Support and Currency Measures:
- Bank Negara Malaysia has encouraged state-linked firms to repatriate and convert foreign income.
- The central bank has utilized forwards to support the ringgit.
Global Technology Cycle:
- An upturn in the global technology cycle is aiding the recovery of Malaysian exports.
Yield Differential Dynamics:
- The Fed's anticipated rate cut is expected to narrow the record discount to the US, making ringgit-denominated assets more attractive to dollar-based investors.
Expert Opinions:
- Christopher Wong, OCBC Foreign Exchange Strategist:
- Predicts that the ringgit will recover as the Fed moves closer to cutting rates.
- Highlights foreign inflows into local shares, recovery in the semiconductor cycle, and potential recovery in the Chinese economy as additional support factors.
Economic Indicators:
US Swaps Market:
- Pricing in a full quarter-point cut by September, which would enhance the appeal of ringgit assets for dollar investors.
Exports:
- Malaysian exports returned to positive territory in Q2 2024, after contracting for 12 out of the previous 13 months due to weak demand from China.
GDP Growth:
- Malaysia's second-quarter GDP beat all estimates, suggesting continued economic momentum.
- This growth supports the central bank’s decision to maintain steady borrowing costs, further bolstering the ringgit.
The ringgit has emerged as Asia's top performer over the past three months, reflecting renewed investor confidence and strategic economic policies aimed at stabilizing and strengthening the currency.
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