The Anwar – Mahathir feud is a factor in the ringgit’s 26 year low

The Anwar – Mahathir feud is a factor in the ringgit’s 26 year low

The leaders of the ancien régime, will likely be retaliating against Anwar’s action, by selling off their assets in Malaysia in order to trigger a loss of confidence in the ringgit.

Nehru Sathiamoorthy


This week, by touching RM 4.80 to the dollar, the Malaysian ringgit has reached a 26-year low. The last time the ringgit had gone this low, the Asian Financial Crisis was raging, and Vision 2020, or the dream to make Malaysia a developed nation by the year 2020, died as a consequence.

When Vision 2020 died, the fellowship between Mahathir Mohamad, our then prime minister, and his deputy and heir apparent, Anwar Ibrahim, frayed and deteriorated to a point that Anwar would find himself fired, expelled, humiliated and incarcerated all within a span of a couple of years.

Today, as Anwar and Mahathir prepare to duke it out for the second time, again we find the ringgit to have reached the same level it did 26 years ago.

Is the Anwar – Mahathir conflict to be blamed for the ringgit’s performance?

The answer is most definitely yes.

According to Reuters, the ringgit’s “weakness defies steadiness in oil prices – a Malaysian export – and prospects of recovery in electronics exports. This indicates that the reason that the ringgit is depreciating is because investors have little appetite for Malaysian assets.”

According to Rong Ren Goh, a fixed income investments director at Eastspring Investments in Singapore, the ringgit’s “weakness cannot really be blamed on speculative flows since this has already largely been curbed since a policy ban on ringgit offshore trading since 2016,”.

Therefore, Rong concluded, the ringgit’s “weakness is driven by real flows.”

The question however, is it Anwar or is it Mahathir that is causing investors to flee Malaysia?

Well, the way I see it, they might both be responsible for it.

It is an open secret that the elites of the ancien régime, control billions of ringgits of Malaysia’s wealth either directly or through their cronies.

That Anwar has gone on a warpath against the likes of Mahathir and Daim recently would have both elicited a desire to fight and flee in the members of the ancien régime .

The leaders of the ancien régime, will likely be retaliating against Anwar’s action, by selling off their assets in Malaysia in order to trigger a loss of confidence in the ringgit.

The lower-level cronies of the ancien regime on the other hand, might be moving their wealth out of the country, simply to flee from Anwar’s onslaught. As the proverb says, “when elephants fight, the grass is trampled.” To avoid being trampled by Anwar and forces of Reformasi on one side and Mahathir and the ancien régime on the other side, the minions and cronies of the ancien régime, might simply be selling off their assets in the country and moving out of the country.

Anwar on the other hand, could also have a hand in the decline of the ringgit.

In the last one year plus, the manner by which Anwar has been governing the country, would have likely sent a very clear signal to every investor in the world, that it is Anwar, not any principles or logic, that determines everything that goes on in the country.

If Anwar likes you, you can (seemingly) get 47 DNAA’s or a partial pardon that will halve your jail sentence, even if you don’t even admit you are wrong and have shown any signs that you have turned over a new leaf. If he doesn’t like you on the other hand, your tower might be seized and your children or son-in-law might be investigated by the authorities.

When this is the signal that the Madani government is sending, not only will no foreign investor come to the country, investors who are already in the country will likely be thinking about moving their investment elsewhere as well.

The only people that will be confident about investing in Malaysia are the ones who feel that they can “kamcing” with Anwar, but even these investors will likely be weary, for there is no certainty that Anwar will be able to reign for long.

Legally speaking, Anwar might have been able to make his administration strong, by doing things like getting opposition lawmakers to debase themselves and the parliament, by declaring their support for the government despite being a part of the opposition, but in terms of having a mandate to rule, Anwar’s reign is weak.

At the grassroot level, there is no one in the country, regardless of age, gender or race, that is satisfied with Anwar’s government. Anwar’s administration is offering nothing to the Malays, Chinese, Indians, adults, children, young people, old people, males, females, Muslims, non-Muslims, reformist, conservatives, nationalist, secularist believers, students, business owners or the working class.

If there is one thing good that we can say about Anwar’s administration, it is that it has successfully treated everybody equally, by equally disappointing everybody.

There are two things that are helping Anwar hold on to his reign despite having an abysmal mandate to rule, and they are 1) a still hobbling economy and 2) the absence of an opposition leader that can offer him a genuine challenge.

We don’t know how long the economy will hold, but if you ask anybody on the street, no one has anything good to say about the economy. Nobody wants to be the first to complain about how they are suffering financially, because there is a matter of face involved here, but if the state of the economy keeps declining, to the point that too many people can’t hide their losses anymore, the loss of face and the release of a long-suppressed dissatisfaction, could cause Anwar’s government a serious problem. While most of us have never seen such phenomena as prolonged strikes or debilitating hartals in our country, but if the economy keeps declining to the point that trade unions and employees federation have to argue about each other’s cut of the economic pie, Anwar’s reign will be in serious trouble.

Politically speaking, there are probably three Malay personalities that could upset Anwar if they went toe-to-toe with him. They are, Najib Razak , Khairy Jamaluddin and Dr Ahmad Samsuri Mokhtar. For now, none of them look like they have a chance to face-off with Anwar, but if they find a way, they too could cause a real serious problem to Anwar’s government.

Considering all these factors, it is indeed very likely that the ringgit will continue to slide and perhaps even breach the 5 ringgit to the dollar mark, as some experts have already claimed.