News

Ringgit to continue downtrend, goes down to 4.59 against US dollar

The local note, however, is stronger against other major currencies

by S BIRRUNTHA / pic TMR File

THE ringgit is expected to fall further against the US dollar this week, as investors shift their focus towards the safe haven currency.

Rakuten Trade Research VP Thong Pak Leng said this was as a result of the recent aggressive rate hikes by the US Federal Reserve (Fed) and signs of sharp rate hikes in the future which is likely to weigh on the local note.

He added that the ringgit will continue to be dragged down by market volatility moving forward.

The ringgit opened at 4.5910/5950 against the US dollar today.

At 10.39am, the local note fell to 4.5960/5980 against the greenback from last Friday’s 4.5775/5800.

Meanwhile, AmBank Group chief economist and head of research Dr Anthony Dass said the ringgit is expected to trade between the support level of 4.580 and 4.600, while resistance is pinned at 4.610 and 4.650.

“The ringgit weakened 0.24% to 4.579 and traded within the range of 4.5798 and 4.567.  

“Malaysia’s inflation numbers for August were at 4.7%, which is equivalent to 0.2% on a month-on-month, the slowest pace in four months. This brings inflation year to date to 3%,” he noted in a research note today.

He also said AmBank Group has revised its inflation outlook to 3.6% this year, with an upside surprise of 3.8% and downside of 3.2%

Nevertheless, the ringgit was stronger against a basket of major currencies.

Oil prices sank as Brent dropped 4.76% to US$86.15 (RM395.43) per barrel while West Texas Intermediate fell 5.69% to US$78.74 per barrel as recession fears intensified in the market following the aggressive rate hike path by the Fed.

The FTSE Bursa Malaysia KLCI slipped 0.99% to 1,425.  

Previously, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said a flexible ringgit exchange rate is an important policy to balance the need to absorb external shocks to support domestic economic activity despite the financial market conditions and the uncertain global economic growth rate.

He noted that the government through Bank Negara Malaysia (BNM) will always ensure a stable and smooth financial market situation, in addition to taking proactive measures to ensure sufficient liquidity and a resilient market to ensure the stability of the ringgit value.

“Continuous monitoring is also carried out by BNM to ensure an orderly situation in the foreign exchange market and avoid significant fluctuations in the ringgit exchange rate,” he said in a recent statement.

The minister also reiterated that there will be no peg of the ringgit to the US dollar as this has high risks and trade-offs.

He added that if there is a peg, Malaysia will have to follow the monetary policy of the currency it is pegged to.

He also said a peg would mean that Malaysians would need to pay a high cost to maintain this peg even though the economic situation here is not the same as what it is like in the US.

Zukri

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