The 5-day exponential moving average indicates the ringgit will maintain its momentum this week and stay close at the 4.156 level

by SHAHEERA AZNAM SHAH / pic by BLOOMBERG

THE ringgit is likely to gain on bets of increased stimulus should Joe Biden win the US presidential election against Donald Trump.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the Asian currencies could have seen a positive knee-jerk reaction to a potential Biden win due to his softer stance with China.

At the time of writing, Biden led with 238 electoral votes, capturing 20 states including his home state Delaware.

The ringgit closed weaker against the greenback at 4.1645 yesterday from RM4.154 on Tuesday.

Kenanga Investment Bank Bhd (Kenanga Research) earlier noted that the local unit could be exposed to the number of coronavirus cases and the tabling of Malaysia’s Budget 2021 tomorrow.

“The ringgit is expected to trade with a downside bias this week, as the risk-off sentiment may persist on spiking global Covid-19 figures and ahead of the tabling of Budget 2021,” it stated in a report on Monday.

The investment bank noted that the downfall may be slightly tamed by the potential Democratic victory of the US election and Malaysia’s unchanged Overnight Policy Rate (OPR).

The five-day exponential moving average indicates the ringgit will maintain its momentum this week and stay close at the 4.156 level.

 

“The short-term bias for the US dollar and ringgit pair has turned neutral for this week. However, the US presidential election outcome, central bank rate decisions and Malaysia’s 2021 budget presentation this week may fuel risk aversion and prompt the greenback to settle above the 4.172 level,” Kenanga Research said.

The uncertain outcome of the US presidential election yesterday saw the early gains on the FTSE Bursa Malaysia KLCI (FBM KLCI) give way and close 0.22% or three points higher at 1464.61 points yesterday.

“With Asian markets being the first to react to the US presidential election, the FBM KLCI could turn sideways if Trump were to retain power,” Adam said.

On a sectoral basis, the Bursa Construction Index advanced by 1.7%, making it the biggest gainer yesterday compared to other sectors on the local bourse ahead of the budget tabling.

“While most sectors were up on pricing in a win for Biden in the US presidential election, the fight between the two candidates is really tight as of the time of writing especially with Trump already claiming victory before the polls were finalised,” Adam said.