Ringgit weakens past 4.18 against US dollar
Lowest level in three months as Asian currencies, led by South Korean and Singapore units, hit by sell-off
PETALING JAYA: The ringgit depreciated for the fourth consecutive day yesterday, weakening past the 4.18 level against the US dollar to a three-month low of 4.1845.
The local currency slipped as much as 0.6%, but managed to pare its losses to settle at 4.1820 at 5pm, down 0.53% against Wednesday’s 4.1600.
The ringgit’s downward trend was in line with the sell-off in Asian currencies, led by South Korea’s won and the Singapore dollar which skidded 1% each.
The ringgit strengthened 0.16% to 2.9868 against the Singapore dollar yesterday.
According to
FXTM market analyst Han Tan, the decline in Asian currencies is laying bare uncertainties and investors’ concerns over the impact of the novel coronavirus outbreak on the global economy.
“The dollar’s unrelenting climb so far this month, fuelled by the risk-off sentiment among investors, is also adding pressure on regional currencies,” he told SunBiz.
Tan cautioned that if the risk aversion continues to dominate market sentiment,
the ringgit could test the 4.20 level against the US dollar, which served as a key resistance level for most of 2019.
Sunway University Business School professor of economics Dr Yeah Kim Leng shared a similar view on this.
“The movement of the ringgit is tracking the weakening of the Asian currencies against the greenback as governments in the region are shoring up their economies with monetary and fiscal loosening,” he said.
Yeah opined that weaker currencies are inevitable due to the low interest environment with widened fiscal deficits as stimulus packages are being rolled out or about to be rolled out.
“On the other hand, exports will be more competitive and will help support the domestic economy that has been disrupted by the Covid-19 outbreak.”
MIDF economist Muhammad Zafri Zulkeffeli highlighted that as an open economy, Malaysia’s growth trajectory has been impacted by the domino effects from the epidemic, thus exerting pressure on the local currency.
Other factor contributing to the decline is the possibility of the exclusion of Malaysian bonds by FTSE Russell from its World Government Bond Index in its review due to be conducted next month, he said.