With Budget 2021 expected to be the most challenging amid uncertainties, clearer signs of economic recovery are needed for the ringgit to move higher.
Bank Muamalat Malaysia Bhd economist Izuan Ahmad said whether the ringgit would strengthen would depend on the actual success factors pertaining to the containment of COVID-19.
“At the moment, it is difficult to gauge the potential upward momentum of the ringgit, although it could become somewhat clearer when the latest economic data and figures are published, most of which are expected to be in a better position, given the country’s ongoing 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 such as rubber glove manufacturers, which are also riding on the enhanced global demand due to the pandemic.
On the other hand, it would have an opposite impact on those relying on imported materials or parts.
What the Budget 2021 could bring?
“As such, Budget 2021 could contain measures that would work both ways amid the ongoing uncertainties of the global economic and financial conditions, that is, depending on the upward or downward momentum of the local currency.
Overall, he said Budget 2021 is expected to be among the most challenging in recent years, as it is a tall order for the government to formulate a satisfactory budget amid the uncertainties, which is now made worse as evidence of political instability is starting to rear its ugly head.
“As such, the expected measures under Budget 2021 would likely focus more on the well-being of the people and the affected segments from the ongoing COVID-19 pandemic and resulting lockdowns.
Malaysia’s Budget 2021 will be tabled this Friday, after been deferred from Oct 2.
In September, Malaysia’s trade surplus surged by 149.3 percent year-on-year to RM21.97 billion, the highest trade surplus ever recorded for the month.