Govt urged to help rakyat, businesses affected by weakening ringgit

The currency depreciation presents a significant challenge for the people and businesses as the cost of imported products increases, consequently leading to a decrease in consumer purchasing power.

Juwai IQI global chief economist Shan Saeed said the ringgit's depreciation is mainly due to the strengthening of the US dollar, driven by the hawkish stance of the United States (US) Federal Reserve (Fed), which is set to remain aggressive in its tightening measures.

The Fed has raised its interest rates by 75 basis points three times this year, leading to significant capital outflows from emerging markets, which caused a decline not only in the ringgit but also other currencies.

"The ringgit may end the year at RM4.05-RM4.35 versus the US dollar,'' he said.

Shan also lauded Bank Negara Malaysia, saying that the central bank has done a good job in terms of monetary policy and ensuring financial stability in the system.

PricewaterhouseCoopers (PwC) Malaysia's deals partner for economics and policy, Patrick Tay said given the increasing global headwinds, the government should be cautious about any reduction in fiscal stimulus such as a broad expenditure reduction.

"I hope that the government will put into motion important initiatives that will yield sustained long-term benefits without many short-term impacts," he told Bernama, noting that targeted business and personal tax reductions are also much needed in the current environment.

Overall, he believes that Budget 2023 is set to see significant allocations for healthcare, education and support for the rakyat by alleviating the cost of living.

While the weakening ringgit has impacted some sectors, money services business operator, Merchantrade Asia Sdn Bhd said its business continued to see healthy value and volume of remittance, albeit at a slightly lesser rate compared to the pre-pandemic period.

"With the reopening of borders and removal of travel restrictions, we are seeing a strong surge and turnaround of our currency business, and this has also been a factor for strong growth in the take-up of our Merchantrade Money multi-currency e-wallet as Malaysians start to travel again for business and leisure,'' its spokesperson said.

Moving forward, Merchantrade hopes that the government will introduce policies that will attract stronger foreign direct investments into the country and lure foreign tourists to come to Malaysia, stay longer and spend more.