Ringgit hits 10-month low against US dollar
PETALING JAYA: The ringgit continued its downward spiral yesterday in the wake of Donald Trump’s shock win in the US presidential election, depreciating as much as 1.16% to 4.2843 against US dollar, the lowest in the past 10 months.
The ringgit traded at 4.2797 to the greenback as at 5pm, Bloomberg data showed.
The Malaysian stock market, however, rebounded. The FBM KLCI rose 5.12 points or 0.31% to close at 1652.74 points.
AmResearch believes the ringgit will remain on a weaker bias in December, with full-year forecasts of 4.08-4.09 and 4.11-4.13 for 2016 and 2017, respectively.
MIDF Research is maintaining its ringgit forecast for 2016 at 4.10 to the US currency, but is projected to be stronger in 2017 in anticipation of the weakening of the dollar due to heightened uncertainties over Trump’s policies.
While the market is expected to undergo a period of volatility, Hong Leong Investment Bank (HLIB) Research said, global liquidity remains abundant with ongoing quantitative easing by the European Central Bank and the Bank of Japan, providing a buffer to cushion the downside impact of any severe correction.
Analysts believe the Trump win will likely see the US Federal Reserve put off an expected December interest rate increase, which will be a definite positive for the ringgit as funds will be flowing back to emerging markets.
It also expects Bank Negara Malaysia to continue its accommodative and supportive monetary policy in the near future and a possible rate cut is expected should the after-effect of the US presidential election result be larger than expected.
AmResearch sees the Overnight Policy Rate (OPR) staying unchanged at 3.00% in 2016, but maintains its view of a 40% probability for a 25 basis-point rate cut in the Nov 23 Monetary Policy Committee meeting.
Commenting on trade between Malaysia and the US, MIDF Research said Malaysia’s exports to the US are still significant despite not being as dominant as it was before.
As of September, Malaysia’s exports