Ringgit strengthens to 18-month high against US dollar

PETALING JAYA: The ringgit reached a high of 3.9525 against the US dollar yesterday, the strongest since mid-July 2016, fast approaching the 3.950 level.

Analysts said the current rally in the ringgit looks sustainable, with further upside on the cards if the dollar continues to weaken.

As at 5pm yesterday, the local unit was up 0.35% at 3.9575 against the dollar.

The ringgit traded below the 4.000 mark for the whole of last year. The Malaysian unit started its uptrend in the first week of 2018, to 3.9888 on Jan 8, and then to 3.9732 last Friday.

FXTM research analyst Lukman Otunuga said there is a suggestion that the combination of stronger crude oil prices and ongoing dollar weakness will continue to support the ringgit. The ringgit’s impressive resurgence could also be linked to prevailing bullish sentiment towards the Malaysian economy.

“The ringgit remains buoyed by dollar weakness, rising commodity prices and market expectations of an OPR (Overnight Policy Rate) hike by Bank Negara Malaysia. As long as these key themes persist, the ringgit is likely to witness further upside in the near term,” he told SunBiz.

“If the dollar remains depressed amid low inflation concerns in the US, then emerging markets, including Malaysia, will likely feel the benefit. Alternatively, an appreciating US dollar could halt the upside and pressure emerging market currencies,” he added.

Lukman said investors will continue to pay close attention to US tax reforms as the greenback remains at threat of suffering steeper losses if the impact of US President Donald Trump’s US$1.5 trillion (RM5.9 trillion) plan fails to meet market expectations.

Over at Bursa Malaysia, the FBM KLCI gained 3.24 points or 0.18% to 1,825.91 points yesterday. However, overall market breadth was negative with 378 gainers and 685 losers. - by Ee Ann Nee