Foreign exchange market in Malaysia during covid-19.

Coronavirus disease (Covid-19) is an infectious disease that spread rapidly around

the world including Malaysia. It was caused by a newly discovered coronavirus. The virus
spread easily through air where we can be infected by breathing in the virus. The number of
cases keep increasing from day to day and a lot of deaths were recorded. During the
breakout, many people cannot go to work and some might lose their job. Besides, Covid-19
give big impact on the fallen of economy in Malaysia. A lot of business has to stop operating
or run during the Movement Control Order (MCO) that launched by Malaysia’s prime minister
in order to deal with the diseases. Not only that, foreign exchange market seems to be
affected by it too since it is involves the global market and the other country also faces same
situation as Malaysia.
 Due to Covid-19, the number of losers was higher than the gainers in market
summary. This was happened because of inflation in our country. The local note is expected
to trade in volatile mode in line with other emerging market currencies as the global
economy continues to be under pressure because of Covid-19 and it fears to continue to grip
global market. However, our FXTM Market Analyst, Han Tan, said that global investors
might be looking for further signs of the economic carnage caused by Covid-19. Bank
Negara’s revised full-year GDP forecast will be put as priority and be watched closely as
investors start to worry about Covid-19’s impact on the domestic and global economy.

The impact of Covid-19 has weakened the value of Ringgit in exchange market. The
ringgit seems to be depreciated to its weakest level against US dollar at 4.2957 on 13 March
right after US dollar strengthened on demand for haven currencies during Covid-19
pandemic. Not only that, lower crude oil prices also have resulted in world pandemic. This
caused the ringgit weakened in tandem with lower oil prices at about US$30 a barrel since
Malaysia is one of a net oil exporter. A week after it happened, the oil prices sliding to
US$28 per barrel and this shows how badly Covid-19 can affect not only our market but also
globally.

This problem can be solved if the government take action such as be more serious
with the order of Restriction Movement Order (RMO). The more effort in controlling the
disease from spreading, the higher chances to fix and improve our economy. By doing that,
the value of ringgit in exchange market can be stable and strengthens when the government
successfully slow the spreading of the virus. Many businesses can start operating and gain
profit in order to help rise and stabilize the economy that are in jeopardy. Malaysia’s
government, company and trader should focus on decreasing the number of cases and at
the same time must know to manage the currency risk. It can be managed through two types
which is foreign exchange forward contracts and foreign exchange option to make sure the
Covid-19 did not crash our businesses and economy badly.

In conclusion, Covid-19 ruined the whole world economy and caused fallen to the
foreign exchange market. A lot of country were facing fluctuation on currencies which give
hard time to countries from running international business especially the developing country
such Malaysia. The foreign exchange market that been unstable because of the diseases
was one of the biggest impact of putting economy under pressure and crucial state,not only
in Malaysia but to all countries.
References
Aziz, A. (2020, March 13). Ringgit weakens near 4.30 against US dollar as Covid-19 spurs
haven currency demand. Retrieved from The Edge Market:
https://www.theedgemarkets.com/article/ringgit-weakens-near-430-against-us-dollar-
covid19-spurs-haven-currency-demand

FOREX. (2020, March 21). Malaysian ringgit, currencies, to trade in volatile mode amid
Covid-19 fears. Retrieved from The Star:
https://www.thestar.com.my/business/business-news/2020/03/21/malaysian-ringgit-
currencies-to-trade-in-volatile-mode-amid-covid-19-fears

FOREX. (2020, April 7). Ringgit strengthens as new Covid-19 cases slow. Retrieved from
The Star: https://www.thestar.com.my/business/business-news/2020/04/07/ringgit-
strengthens-as-new-covid-19-cases-slow

Fournier, L. (2020, April 24). Currency exchange risk: How to handle the ups and downs
during COVID-19. Retrieved from EDC: https://www.edc.ca/en/blog/currency-
exchange-risk-covid-19.html

SUNBIZ. (2020, April 28). Malaysia’s forex reserves may dip in immediate term:
PublicInvest. Retrieved from The Sun Daily:
https://www.thesundaily.my/business/malaysia-s-forex-reserves-may-dip-in-
immediate-term-publicinvest-JY2346759