Ringgit strengthens against US dollar

The markets have opened up a lot more friendlier than some have expected


The anticipation of uncertainty that Malaysia will face from the election outcomes has been proven wrong when the ringgit rose to RM3.94 against the US dollar at midday yesterday.

Analyst had anticipated some pressure in the near term as the country awaited clarity on the newly formed governments’ policies, following Pakatan Harapan’s shocking win last week.

The local unit opened at RM3.98 against last Tuesday’s close of RM3.94. However, at 2pm yesterday, the local unit recovered to trade at around RM3.94.

Yesterday marked the first day of trading following the country’s 14th General Election and public holidays which fell last Thursday and Friday.

Oanda Corp head of trading for Asia Pacific Stephen Innes said the markets were relatively calm yesterday and this created a good appetite for the ringgit.

“It opened at less than 1% weaker, the strong local US dollar selling had contributed to the move lower as well,” he told The Malaysian Reserve (TMR).

Innes added that the markets had opened up a lot more friendlier than some had expected.

Rakuten Trade Sdn Bhd research VP Vincent Lau said the sentiment is turning, while the market did have a sell-off it managed to recover quickly yesterday.

“It is a sign of confidence, investors are buying as the gainers are fairly broad-based and the ringgit is recovering,” he said.

According to Lau, only the construction-related stocks are being sold down right now.

ForexTime Ltd global head of currency and market research Jameel Ahmad said the period of uncertainty will continue to fade over time, as opportunities for the ringgit to recover will continue to present itself.

“Although, there is a distinct possibility that headline growth will not be able to keep up with the overwhelming out-performance seen last year, a headline growth number somewhere around the 5% level will highlight to international investors that the domestic economy is still consistently performing far beyond the economic growth seen in the developed world,” he said.

A senior foreign-exchange analyst told TMR that the ringgit is expected to test back between RM3.85 and RM3.88 in the next few weeks, with very much reliance on the trend of the US dollar.

The ringgit slipped as much as 0.9% against the Singapore dollar as at 9.30am yesterday, reaching 2.99 per Singapore dollar and closed at RM2.96 at 6pm yesterday.

Many are positive on the sweeping changes made by Prime Minister Tun Dr Mahathir Mohamad as soon as he stepped into position.


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