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Ringgit opens at 19th month high

by January 8, 2018 General

A Malaysia Ringgit note is seen in this illustration photo June 1, 2017. — Reuters picA Malaysia Ringgit note is seen in this illustration photo June 1, 2017. — Reuters picKUALA LUMPUR, Jan 8 — The ringgit continued its upward momentum to open at a 19th month high of 3.9880/9930 against the US dollar today, on improved sentiment towards the local note.

It was prompted by the strong trade surplus, as well as, expectations of a hike in the Overnight Policy Rate (OPR) by Bank Negara Malaysia this year.

The local unit, which last touched the 3.98 level on July 19, 2016,  was up 70 basis points against last Friday’s close of 3.9950/9000.

In a note, RHB Research said the ringgit strengthened by 1.7 per cent to RM3.9985 to the US dollar in the first week of January 2018, after appreciating by 0.6 per cent  in December 2017.  

“The stronger ringgit is most likely due to a strong trade surplus, as well as higher oil prices during the period. This is accompanied by expectations of a hike in the OPR by the central bank this year.

“For the full year of 2017, the ringgit strengthened by 9.5 per cent, after depreciating by 4.5 per cent in 2016,” it said.

Moving forward, the research house expects the ringgit to strengthen gradually to RM3.95 against the US dollar at the end of 2018, from RM4.062 as at end-2017, driven by a surplus in the current account.

RHB Research said the US dollar would likely decline given expectations of a stronger Euro as the European Central Bank moves to taper its quantitative easing, and this, in turn, suggests that emerging currencies like the ringgit could strengthen against the US dollar as well in 2018.

Meanwhile, the ringgit traded mostly higher against a basket of major currencies.

It appreciated against the Singapore dollar to 3.0062/0102 from 3.0081/0123 on Friday and rose against the yen to 3.5258/5311 from 3.5279/5333.

The ringgit was higher against the euro at 4.8027/8092 from 4.8116/8192, but fell against the British pound to 5.4121/4205 from 5.4048/4132. — Bernama