PETALING JAYA – The ringgit has taken a sudden turn for heavy weakness in the new trading week as a combination of renewed speculation of an impending US interest rate increased and depressed oil prices weighed heavily on the local currency.
FXTM research analyst Lukman Otunuga said comments from Federal Reserve officials on how raising interest rates could benefit the economy have renewed expectations that the US central bank will pull the trigger, consequently leaving emerging currencies such as the ringgit vulnerable to losses.
“Although the ringgit could be exposed to further losses if bets mount over the Fed taking action in 2016, the overall outlook for Malaysia still looks encouraging,” he said in a statement yesterday.
The economy grew by 4% in the second quarter while Bank Negara Malaysia continues to express optimism over steady growth in the future. At the central bank’s Monetary Policy Committee meeting recently, the Overnight Policy Rate was left unchanged at 3% amid the improving sentiment, which could add to the attributes that strengthen the ringgit in the medium term.
“From a technical standpoint, the US dollar-ringgit is stuck in a wide range but could trade higher if buyers conquer 4.15,” Otunuga said.
The ringgit yesterday fell to its lowest point in more than two months to 4.1265 to the US dollar. As at 5pm, it was trading at 4.1075 against the US dollar, Bank Negara Malaysia figures showed. It was also weaker against the British pound at 5.4634 and against the euro at 4.6142. – Sundaily