The ringgit touched its strongest level in three months on Friday, climbing to 4.4760 against the US dollar. But the currency’s 0.43% advance tells only part of the story. Behind that number sits RM286 billion in government bonds held by foreign investors — and a broad market waiting to see if Prime Minister Anwar Ibrahim’s new unity government can actually deliver the fiscal repair it has promised.
The currency strengthened as offshore funds bought Malaysian equities for the first time since November 17, snapping up RM341 million of shares in a single day. That broke a near-weeklong selloff. But the buying was one-sided. Local institutions sold RM159 million. Local retailers sold RM182 million. Domestic players, the numbers suggest, are not convinced Anwar’s coalition can move fast enough on reform.
“The ringgit is cheap on a real-effective basis, but cheap is not enough,” UOB Kay Hian strategist Julia Goh told clients. “You need policy follow-through.”
That follow-through hinges on Parliament. Lawmakers are set to reconvene and re-table Budget 2023, a spending plan shelved after the previous administration collapsed. Anwar has promised to reopen those bills. Markets want to see subsidies targeted. They want to see revenue widened. And they want it done without spooking the foreign holders of those RM286 billion in government bonds.
The ringgit’s close at 4.4760 was its strongest since mid-August. Goh described the currency as pricing in “a narrow window for credible fiscal repair.” The word narrow matters. If the window closes — if Parliament stalls, if the budget disappoints — the offshore money that just returned could leave just as quickly.
On Bursa Malaysia, the benchmark FBM KLCI slipped 1%, ending at 1,453.7, down 14.7 points. Turnover hit 4.4 billion shares worth RM2.75 billion. Losers beat gainers 629 to 347. The index had rallied for six straight days on foreign buying. Friday was a profit-taking session.
Consumer heavyweights took the worst of it. Nestle lost RM1.10 to RM130.40. Dutch Lady slid 28 sen to RM31.10. PPB Group eased 36 sen to RM16.20. Malaysian Pacific Industries, a chip-testing firm, also fell.
The numbers on Friday describe a market caught between two bets. One bet is that Anwar’s government can stabilize politics and push through reforms that make Malaysia a more predictable place for foreign capital. The other bet — the one local institutions and retailers are making with their own money — is that the reform story is not yet real.
Foreign investors bought RM341 million of shares on Friday. That is real money. But it followed a stretch of selling. And it was met by domestic selling of nearly equal size. The KLCI fell anyway. The ringgit rose, but only 0.43%.
The stakes are concrete. Malaysia’s bond market holds RM286 billion in foreign-owned government debt. Those holders are watching the same Parliament, the same budget, the same Cabinet lineup. If they decide the narrow window has closed, the ringgit’s three-month high will be a short-lived headline. If the window stays open, the currency may have further to run.
For now, Friday’s data shows a market split down the middle — foreign money buying in, local money selling out. The ringgit at 4.4760 is the prize for those betting on reform. The KLCI at 1,453.7 is the cost of waiting to see if that bet pays off.
