Judging by the ringgit’s movement pattern in the fourth quarter of the last few years, even though the currency is currently volatile and Malaysians are becoming jittery, it is not going to crash, and will unlikely be traded beyond 4.50 against the US dollar, an economist said.
IQI Group Holdings Chief Economist/Investment Strategist Shan Saeed said the ringgit would not collapse – instead it would just depreciate, in a manageable way, against USD, as the greenback is getting stronger due to ‘Trumponomics.’
“Trumponomics describes the economic policies of Trump. He is an entrepreneur and he knows how to play his cards.
“The US dollar is gaining strength and investors are moving funds into the greenback. It is as simple as ‘ABC’. The yield on the US 10-year Treasury note has jumped from 1.37 per cent to 2.36 per cent in just four-and-a-half months,” he told Bernama.
Shan said the yield of other fixed-income instruments has also perked and attracted fund movement, while that of the Italian 10-year government bond has more than doubled since Aug 2016.
The Libor, one of the world’s most important benchmark rates, has jumped from 0.61% at the start of the year to 0.91%, its highest level since Nov 2009, he said.
“Sit back and relax. Currency values are determined by market forces,” said Shan, adding that all other currencies in the region have also taken a beating from the US dollar.
“I strongly believe the ringgit will soon stabilise and appreciate to the level of 4.20 to 4.30 (against the USD) within this month or January next year. What is more, the benchmark for oil prices has started trading above US$53 per barrel,” he said.
“If you were to look at the chart for Nov, the Indonesian rupiah declined 3.7%, the Philippine peso fell 2.7%, the Singapore dollar is down 2.5%, and the Thai baht lost 1.5%.
“Does the currency chart mean that all these governments are bad, or their policies are wrong? The answer is no!
“It is because the US dollar is gaining strength and investors are moving funds into the US currency due to Trumponomics,” he added.