PETALING JAYA: The ringgit is expected to weaken in the immediate aftermath of the US-Israel-Iran conflict, but analysts believe the depreciation will be short-lived, says economist Prof Emeritus Dr Barjoyai Bardai.
He said the ringgit could fall to around RM4.40 against the US dollar over the next three months, before stabilising as markets adjust.
“Consumer perception will play a key role during this period,” he said, stressing that how Malaysians interpret ongoing developments will directly influence domestic spending trends.
Prof Barjoyai said the US dollar might strengthen in the short term due to perceived dominance but this trend is unlikely to last.
“In the mid to long term, the world will start distancing itself from the United States and the dollar,” he said, adding that anti-US sentiment, especially among Muslim-majority countries, could lead to a drop in global demand for the greenback.
These concerns are compounded by escalating tensions in the Middle East, particularly Iran’s latest warning to close a key energy chokepoint.
If implemented, the move could send Brent crude prices soaring well above US$100 (RM428.65) per barrel, according to analysts from JPMorgan, Goldman Sachs and Deutsche Bank.
Dr Barjoyai also said the closure of the Strait of Hormuz might trigger global supply disruptions, leading to short supply and rising costs.
Even if the strait isn’t fully closed, Iran may impose surcharges or fees, which will still drive up costs of imports and exports, he added.
He said businesses, particularly wholesalers, retailers, SMEs and microenterprises would likely raise their prices due to higher fuel costs, as diesel and petrol are key to their operations.
“With Malaysia’s economy so dependent on consumer spending, perception is critical. If people expect the worst, growth will contract and inflation will accelerate,” he said.
To ease the burden, he suggested the government consider postponing the sales and service tax (SST) expansion and RON95 subsidy rationalisation, or at least communicate clearly how minimal the actual impact would be.
Yesterday, Iran’s parliament announced plans to possibly close the Strait of Hormuz in retaliation for recent US and Israeli strikes on its nuclear and military facilities.
Senior fellow at the Nusantara Academy for Strategic Research Dr Azmi Hassan said Malaysia may face economic repercussions if tensions between the United States, Israel and Iran escalate further, particularly if Iran closes the Strait of Hormuz.
He said any disruption would still impact fuel prices and the wider economy.
“The Strait of Hormuz is a critical route. If it’s closed, the whole world suffers. Most Asean nations, including Malaysia, are dependent on Gulf oil,” he said.
Senior lecturer at UiTM and director of the Asia West East Centre Dr Abdolreza Alami echoed a similar view, saying Malaysia’s energy security faces serious risks if the Strait of Hormuz is disrupted amid the escalating military action.
He said Malaysia sources nearly 30% of its oil and gas from the Persian Gulf, with the strait acting as a vital artery for global supply.
Any closure or instability there could trigger a fuel price surge, he added.
He believes that oil prices could possibly hit US$150 (RM642.97) or more per barrel and petrol prices soaring beyond €2.5 (RM12.24) per litre.
He said that would drive up costs across key Malaysian sectors including electronics, petrochemicals and palm oil, undermining their global competitiveness.
“We are also seeing a 20-fold spike in insurance costs for ships in the Gulf, which could cause major shipping delays at Port Klang and Singapore,” he added.
Abdolreza also cautioned that the conflict could derail Asean’s growing economic engagement with the Gulf Cooperation Council (GCC) countries, undermining regional efforts to reduce Western dependency.
A united Asean response, he said, could boost the grouping’s global credibility as a champion of justice and sovereignty.
