Answer to Question #216288 in Economics for alan

Question

4) What will happen if the United States and Malaysia continue to pursue the economic policies outlined in part (b) above, and the Malaysian central bank continues to take the action outlined in part (c)?

5) Suppose you are a trader in the foreign exchange market. How would you adjust your expectation of the ringgit's future dollar price (𝑒 𝑒 ) based on your answer in part (d What effect does this have on the foreign exchange market? Would it make the job of Malaysia's central bank simpler or more difficult? What is the reason for this?

Answer 1

Malaysian-American relations is a bilateral relationship between Malaysia and the United States, which established diplomatic relations for the independence of Malaysia in 1957. Malaya was the predecessor state of Malaysia, a larger federation that was formed through the merger of Malaya, North Borneo, Sarawak, and Singapore in 1963. Just before the merger, the last three territories were formerly part of the British Empire. But the US has had a consular and trade presence in Malaya since the 1800s. US traders, especially Joseph William Torrey along with Thomas Bradley Harris, also had commercial interests on the northwest coast of Borneo in the 19th century, where they established the American Borneo Trading Company.

Malaysia has an embassy in Washington DC and consulates general in Los Angeles and New York. The United States retains its embassy in Kuala Lampur. Since 2014, the United States has viewed Malaysia as a Comprehensive Partner, which has raised the profile of diplomatic ties as part of President Barack Obama's policy toward Asia. The partnership expanded bilateral consultation and cooperation on politics, diplomacy, trade, investment, education, interpersonal relations, security, environment, science, technology, and energy, which President Donald Trump continues to strengthen in 2017.

In 2016, the US is Malaysia's third-largest export market by value, while Malaysia is the 25th largest US export destination and among the latter's largest trading partners.