Ringgit to stay under pressure on US interest rate rise

Dec 31, 2016


The ringgit, which ended the year on a bearish note, will likely continue its downtrend next week, as investor sentiment is dampened by expectations of higher US interest rates next year.

A dealer said strong US economic data which showed US consumer confidence rose to the highest in more than 15 years in December would encourage the Federal Reserve to be more aggressive in its monetary policy.

Furthermore, he said the ringgit was also pressured by heightened uncertainty over the economic policies of US president-elect Donald Trump, who will be taking office on Jan 20.

“Concerns over Trump’s trade policies are also putting a lot of pressure on the currencies of export-dependent countries in Asia, including the ringgit.

“However, we believe the ringgit will eventually stabilise and strengthen considering Malaysia’s strong fundamentals, coupled with Bank Negara Malaysia’s measures to reduce volatility in the local currency,” he added.

For the week just-ended, the ringgit was traded at 4.4845/4875, its lowest level against the US dollar since the 1997/98 Asian financial crisis, compared with 4.4725/4755 recorded last Friday.

The ringgit fell against the Singapore dollar to 3.1043/1085 from 3.0934/0959 last Friday and slid to 3.8375/8411 versus the yen from 3.8112/8145 last week.

Against the British pound, it declined to 5.5213/5259 from 5.4904/4946 previously and weakened to 4.7482/7523 against the euro from 4.6751/6800 last Friday.– Bernama