Petaling Jaya: While the recent sharp appreciation of the ringgit against a basket of other currencies has improved the mood of the Malaysian public, analysts caution that the movement of the local currency is a two-edged sword for businesses over the immediate term.
As of noon Nov 21, the ringgit had strengthened by 7.3% against the US dollar year-to-date, but with Malaysia being an export nation, concerns have arisen over companies and industries, such as rubber gloves and semiconductor, whose focus is on external markets.
That said, established names in the gloves industry have moved quickly to soothe the concerns of investors and consumers over the ringgit’s strength, adopting a philosophical attitude toward foreign exchange (forex) movements.
For example, Top Glove Corp Bhd
, the world’s largest rubber-glove manufacturer, told StarBiz that any impact from the strengthening or weakening of the ringgit will be short term, although it conceded that it does affect all glove exporters, as the industry trades in US dollars.
However, the group said the impact is mitigated by a number of elements, including the fact that 50% to 60% of Top Glove’s input costs, especially raw materials, is also denominated in the greenback.
