Gloves are off as Malaysia’s strong ringgit bites into profits of world’s largest makers

“While ringgit strength lowers systemic risk at the macro level, it comes at the expense of exporter earnings,” said Teck Yong Eng, business enterprise and analytics professor at the University of Reading Malaysia.

The strengthened Malaysian currency hurt first-quarter earnings of Top Glove, the world’s largest glove maker. Its year-on-year sales volume growth of 17 per cent was dampened by an 11 per cent fall in average selling prices due to a weaker dollar against the ringgit.

“As over 90 per cent of glove manufacturers’ sales proceeds are denominated in dollars, we expect the persistent softness of the US dollar versus the ringgit to adversely impact glove makers’ profitability,” Chun Sung Oong, an analyst at CIMB Securities, said in a January 7 note.

The ringgit climbed more than 10 per cent against the dollar last year, making it Asia’s best-performing currency as Malaysia’s deep linkages to the global tech supply chain, an improving economic growth outlook and the government’s continued push for fiscal consolidation bolstered investor confidence.

Strategists say the currency is poised to extend gains this year.