Ringgit to trade in 4-4.20 range for next 6 months

Firmer commodity prices of oil and CPO have further supported the local unit


RINGGIT is expected to trade range-bound between 4.00 and 4.20 against the US dollar in the next six to 12 months, largely influenced by interest rates differentials between the two currencies.

Standard Chartered head of managed investments and product management Danny Chang said the yield were deemed more favourable for the ringgit.

“The current Malaysia 10-year government bond yields 3.22% compared to the US which offered 1.42% yield. This is one of the factors that support the ringgit,” Chang said during Standard Chartered’s 2021 virtual press conference on global economic outlook yesterday.

He said firmer commodity prices of oil and crude palm oil (CPO) have further supported the local unit.

Risks lie on the country’s lockdown measures, which have adverse impact on the economy and would pull the ringgit down at least in the short term.

Chang said it acts as a counterbalance to the good aspects of the ringgit’s position.

Ringgit was traded at around the resistance of RM4.16 against the greenback yesterday.

It has weakened by about 3.5% year-to-date (YTD) from the range of RM4.01 in January.

Chang prefers Asian exchanges to FTSE Bursa Malaysia KLCI (FBM KLCI) based on the economic recovery curve.

He said the performance of the Malaysian stock market hinges on the country’s rate of vaccination.

He said there are greater opportunities in other parts of Asia at present, given their sectoral tilts more to medical, technology, and structural long-term themes compared to the FBM KLCI.

He added it is far too early for investors to position themselves in Malaysia’s equity market based on its recovery plan and to reach herd immunity by October.

The FBM KLCI declined 1.48 points to 1,530.15 yesterday and the benchmark has fallen by 5.96% YTD.