Malaysia’s exports do not compete directly with those from China, the country will still be affected, as a weaker yuan could lower China’s domestic spending on imported goods.
“Malaysia is vulnerable because a large portion of its exports end up in China, probably partly reflecting commodities.
China is Malaysia’s second-largest export market.
China’s currency move caused Malaysia’s stock market to plunge, with the benchmark FTSE Bursa Malaysia KL Composite Index losing 57.55 points over the week to close at 1,596.82 points yesterday, and the ringgit to fall even further against the US dollar.
Malaysia’s stock market and ringgit decline reflects dampened investor sentiment on the country at a time when it is already battered by domestic political uncertainties, lower commodity prices, and the expectations of a US interest rate hike.