By BERNAMA / Graphic By TMR
The decline of the ringgit to RM4.1460 at yesterday’s closing was primarily caused by external anomalies rather than domestic factors, said economists.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the receding local note performance revolved around happenings in the external economy.
“We have seen South Africa falling into recession, Argentina’s central bank raising its policy rate to 60% last week and the ongoing trade tension instigated by the US.
“All this had adversely affected market confidence and naturally, flight to quality happens,” he told Bernama yesterday.
Mohd Afzanizam said this would mean demand for safe-haven currencies such as the US dollar and yen would rise.
By extension, he said the attractiveness of safe-haven currencies would weaken the emerging country currencies, including the ringgit.
“Based on the technical charts, the resistance level is at RM4.17 and perhaps, this could be the next level should risk aversion in the markets continues,” he said.
Meanwhile, Putra Business School senior lecturer and manager for business development Dr Ahmed Razman Abdul Latiff said one possible reason why the ringgit had been declining against US dollar was slower Malaysian export growth to the US this year.
“The slower growth is due to tariff hikes imposed by the US since early this year, and it is possible for the ringgit to go down further to RM4.20 per dollar by year-end,” he said. —