Anticipation of an interest-rate rise in the U.S. for the first time in nearly a decade has injected renewed strength in the greenback this year. While some businesses fear that a rejuvenated dollar could limit corporate profitability, the world's biggest nitrile glove maker Hartalega told CNBC it isn't too worried.
"The strengthening of the U.S. dollar is positive for the glove industry and also for [Malaysia's] export business," Kuan Mun Leong, managing director of Kuala Lumpur-based Hartalega Holdings told CNBC's "Managing Asia."
Kuan is not alone; industry watchers also expect a stronger greenback to be a tailwind for Malaysia's massive rubber glove industry which meets more than 50 percent of global demand, according to the Malaysian Rubber Export Promotion Council.
In a note released in June, UOB KayHian's analyst Lester Chin said: "A firmer U.S. dollar remains a boon to the export-oriented glove manufacturing sector, since glove makers are expected to benefit from higher ringgit-denominated revenue given that the bulk of sales receipts are denominated in U.S. dollars. Furthermore, with most commodities traded in U.S. dollar, the stronger greenback could help prolong the current period of soft raw material costs."
Chin also expects industry earnings to rise around 3-5 percent for every 1 percent rise in the U.S. dollar against the ringgit.
Year to date, the greenback has risen 6.8 percent on the back of speculation that the U.S. central bank could raise rates as soon as this month, while a persistent slump in oil prices and domestic political strife have exacerbated the slide in the ringgit.
While the favourable foreign exchange could translate into a decent fillip, Hartalega's Kuan remains cautious, noting that the benefits may be short-lived.
"We don't see a long-term benefit [because] the glove-making sector quotes monthly prices. We don't have a fixed price contract for our products," Kuan said. "With customers being so well informed, they would come after us for a bargain if they see the dollar strengthening."