The ringgit’s rebound is due to the confluence of various short-term factors, which we had written about in an article in March, including improved tourist arrival numbers and foreign direct investment (FDI), encouragement from the government to repatriate and convert foreign earnings into ringgit, and, of course, expectations for lower US interest rates.
The ringgit is among the best-performing currencies in the world against the US dollar so far this year (see Chart 1). Without question, this is a remarkable turnaround, from having fallen to as low as 4.80 to the greenback (the weakest since the Asian financial crisis) earlier in the year.
