Malaysia’s ringgit had its best day in nearly two weeks on Thursday (24th), and stocks also rose 2% on signs of a breakthrough in the political deadlock.
The ringgit rose as much as 1.5 percent to 4.5072 on Thursday, on track for its best day since Nov. 11. Stocks in Kuala Lumpur rose as much as 2%, on track for their best day since Aug. 24, 2021.
Natwest Markets emerging markets strategist Galvin Chia attributed the ringgit’s gains to broader market optimism, with most Asian assets trading higher after the U.S. Federal Reserve minutes raised expectations for a dovish rate hike.
Chia said that the rise in the exchange rate of Malaysian stocks is partly due to catching up with the international footsteps.
Malaysia held a general election on Saturday, with Anwar Ibrahim’s Pakatan Harapan coalition and former Prime Minister Muhyiddin Yassin’s Perikatan Nasional coalition failing to win half of the seats, making it difficult for a new prime minister to be born. Singma media reported that the National Front, which won 30 seats, intends to cooperate with the Pakatan Harapan Alliance to form a coalition government and support Anwar as the prime minister.
However, Chia believes that while on the one hand, more discussion has centered on a potential coalition being on the horizon, on the other hand, there are also doubts about how stable such a governing coalition could end up being, and what that means for government policy.
Since the last general election in 2018, Malaysia’s political situation has been unstable, and three prime ministers have changed in the past few years. Malaysia’s king will meet other senior royals on Thursday to help decide who will become prime minister.