The Wall Street Journal reported that Malaysia’s downward trend on exports is finally correcting itself; however, there is still a great deal of concern over the strained capital market.
The Malaysian ringgit has steadily declined his past quarter. The current-account surplus is still healthy but there is still concern over the pace of it’s decline.
Exports of commodities such as petroleum and palm oil have aided Malaysia maintain a surplus. But lukewarm demand from the West and slowing growth in China have contributed to the decline in it’s exports. While government led infrastructure spending has directly affected the demand of construction equipment from the US, it is this same spending which has eroded the current surplus over the recent months.
This coupled with the rise in U.S. interest rates has led to the sell off in bonds and shares which in turn has affected the valuation of the Malaysian ringgit. Because of these current market pressures the government has made the decision to stagger deliveries of heavy equipment for the large infrastructure projects.
Economist expect the currency to remain under pressure as export growth gains pace and imports slow.