Ringgit down on US dollar strength

PETALING JAYA: The ringgit fell to its weakest level since 2016, after the currency briefly breached the Rm4.50-mark against the US dollar.

Ahead of Bank Negara’s decision on the overnight policy rate (OPR) tomorrow, the ringgit slipped to an intra-day low of 4.5002 against the greenback yesterday.

However, the currency managed to close at 4.4985, having weakened by 0.14% from the day earlier.

It is noteworthy that the ringgit was not the only Asian currency that weakened against the greenback yesterday.

For example, the Japanese yen fell by 0.72% against the US dollar, while the Chinese yuan and the Taiwanese dollar declined by 0.35% and 0.11%, respectively.

The US dollar has been gaining strength as recessionary fears and firmer wage growth seemed to keep the greenback bulls hopeful.

The US Dollar Index, which is often used as an indicator of the greenback’s strength, touched a new two-decade high.

A resurgent greenback has put pressure on global currencies as investors anticipate that the United States’ Federal Reserve – the equivalent of Bank Negara – will continue its aggressive monetary tightening to tame inflation.

As for Malaysia, the call for an early general election has added another layer of uncertainty, amid concerns that the economy may hit a soft patch in the second half of 2022.

Aside from its performance against the US dollar, the ringgit also depreciated against most major currencies, as tracked by Bloomberg.

Against the British pound, the ringgit fell by 0.92%. Meanwhile, the ringgit weakened by 0.41% against the euro, 0.1% against the Singapore dollar and 0.09% against the South Korean won.

However, the ringgit strengthened by 0.58% against the Japanese yen and 0.05% against the Australian dollar.