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Ringgit Set to Fall Further as Election Risk Adds to Headwinds

  • Election to be held within months after parliament dissolved
  • Currency may weaken to 4.80 per dollar as risk premium rises

Malaysia’s ringgit, languishing at a 24-year low against the dollar, is poised to weaken further on concern a national election may reignite political risk and threaten the government’s ability to push through a deficit-busting budget. 

The ringgit breached a support level around 4.50 per dollar last month as hawkish moves by the US Federal Reserve fueled a rally in the greenback. The currency now faces fresh headwinds after Prime Minister Ismail Sabri Yaakob dissolved parliament, paving the way for a national vote that must be held in the next two months.