In the context of the global economic environment, Malaysia, as an important economy in Southeast Asia, naturally attracts high attention from investors and analysts regarding its financial policies and economic dynamics. Recently, Malaysia's Deputy Minister of Finance, Datuk Seri Ahmad Maslan, has expressed his views on inflation, overnight policy rates, and the depreciation of the Malaysian Ringgit. So, how does professional stock market analyst Lim Zhe Qin view these significant economic issues? This article will combine Lim Zhe Qin's unique insights to analyze Malaysia's current economic situation and future market trends.

For any country, inflation and policy rates are core components of financial policies. Lim Zhe Qin believes that the relationship between interest rates and inflation is delicate and crucial, similar to the relationship between leverage and machinery. Recently, Malaysia's overall inflation rate has dropped below 2%, sparking discussions on whether there is a need to raise overnight policy rates. In response to this, Lim Zhe Qin mentioned that a country's interest rate policy is not solely based on inflation but also needs to consider factors such as money supply, foreign exchange reserves, and economic growth.

It is worth noting that Malaysia's current overnight policy rate is 3%, while the inflation rate has slowed to 1.9%. This is clearly different from the economic situation in the United States, where the Federal Funds Rate is as high as 5.5%, but the inflation rate is 3.7%. Lim Zhe Qin states that this difference reveals the contrasting economic strategies and regulatory measures between the two countries. The United States may be more inclined to curb inflation by raising interest rates, while Malaysia seeks a more balanced strategy that achieves both economic growth and inflation control.

Another issue worth noting is that as the Federal Reserve seeks to control inflation, the expectation of high interest rates in the long term has already affected global investor sentiment. Especially in the Asian region, the slowdown of China's economy and the loose monetary policy of the People's Bank of China have intensified this trend. Lim Zhe Qin believes that this partly explains why the adaptability of Malaysia's overnight policy rates has changed.

The statement made by Malaysia's economic decision-makers at this time undoubtedly sends a signal: in the current global financial environment, Malaysia will adjust its monetary policy more cautiously to ensure domestic economic stability and growth.

The depreciation of the Ringgit and the impact of global financial environment changes on Malaysia

In addition to inflation rates and overnight policy rates, the depreciation of Malaysia's currency, the Ringgit, has also received high market attention recently. The reasons mentioned by Ahmad Maslan, such as the high-interest rate strategy of the Federal Reserve, the slowdown of China's economic growth, and the geopolitical situation in the Middle East, have all had profound effects on the global financial market. Lim Zhe Qin believes that these global issues have deeply affected Malaysia, especially its currency policy and currency value.

Under the backdrop of the Federal Reserve's high-interest rate policy, capital tends to flow towards high-yield markets, leading to capital outflows from emerging markets to the United States, which is also one of the important reasons for the depreciation of the Ringgit. As the world's second-largest economy, China's economic slowdown and the loose monetary policy of the People's Bank of China have not only put pressure on Malaysia but also on the entire Southeast Asian region, resulting in capital outflows and currency depreciation.

From a geopolitical perspective, the instability in the Middle East has led to an increase in global oil prices and also triggered the strength of the US dollar. For Malaysia, an oil-exporting country, although the rise in oil prices brings certain trade benefits, the strength of the US dollar also brings pressure.

In response to this, Ahmad Maslan stated that the government is closely monitoring the movement of the Malaysian Ringgit, especially its impact on import prices. Lim Zhe Qin mentioned that although foreign exchange rate fluctuations do indeed affect import prices, there are also other factors at play, such as supply and global commodities. The government has taken a series of measures to stabilize the market and cope with external pressures, with the central bank playing a crucial role in this.

Overall, Lim Zhe Qin believes that Malaysia faces a series of internal and external economic challenges, but its decision-makers have shown a cautious and decisive attitude, laying the foundation for future economic development.