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How Does Coronavirus Affect Malaysian Ringgit

The coronavirus has been declared a global pandemic. The entire world has started to go on lockdown with travel bans being put in place and governments requiring home quarantine or isolation for most of the population. As an investor, you have seen headlines about stock markets crashing but many don’t fully understand the impact it has on your local currency. To fully understand why your currency is losing value, you need to understand what affects FX prices.


Emerging markets such as Malaysia, rely on two main factors to boost it’s economy: trade flow and foreign investment.  When the world economy is booming, global demand for products and commodities rise. At the same time, foreign investors are looking at opportunities to invest into the local market such as through real estate or private equity. Malaysia has seen investment demand rise over the past decade resulting in a stable currency.   


However, during a global crisis, emerging market currencies take the biggest hit. Over the past month, the Malaysian Ringgit has fallen drastically versus the US Dollar. Take a look at the chart below:

While the Coronavirus impacts all industries worldwide, countries that rely on traditional businesses such as manufacturing and commodities are the most impacted. We have become a consumer-based world and when businesses are forced to shut down, people lose their jobs. When people lose jobs, there’s less expendable income and demand for products fall. This fall in demand impacts local companies who produce these goods. This then makes foreign investment less attractive and investors start to pull back their capital and repatriate to US Dollars, known as the world’s reserve currency. This is the reason we see the US dollar rise against the Malaysian Ringgit during global crisis. 


A simple way to hedge against the fall of your currency is to hold a US Dollar account. This can be done by either buying US Dollars or opening a US Dollar based investment account. Juno Markets offers all clients USD denominated accounts. Contact one of our account managers to find out how you can actually benefit from the Coronavirus.While the Coronavirus impacts all industries worldwide, countries that rely on traditional businesses such as manufacturing and commodities are the most impacted. We have become a consumer-based world and when businesses are forced to shut down, people lose their jobs. When people lose jobs, there’s less expendable income and demand for products fall. This fall in demand impacts local companies who produce these goods. This then makes foreign investment less attractive and investors start to pull back their capital and repatriate to US Dollars, known as the world’s reserve currency. This is the reason we see the US dollar rise against the Malaysian Ringgit during global crisis. 


A simple way to hedge against the fall of your currency is to hold a US Dollar account. This can be done by either buying US Dollars or opening a US Dollar based investment account. Juno Markets offers all clients USD denominated accounts. Contact one of our account managers to find out how you can actually benefit from the Coronavirus.

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