KUALA LUMPUR: Malaysian Ringgit falls to 4.059 against the U.S. dollars on Wednesday, the lowest level in seven months, as stronger greenback and lower oil prices weigh down the Southeast Asian currency sentiment.
The Ringgit opened lower against the U.S dollar at 4.0485 on Wednesday morning, and continued to decline to 4.059 in afternoon, a 0.32 percent lower from its previous close, reports Xinhua.Oanda Asia Pacific trading head Stephen Innes said in a note Tuesday that a stronger U.S. dollar in the face of significantly lower oil prices suggests the Ringgit should struggle to gain traction and the exchange rate will gravitate to the top side of the current ranges.
“If the global trade war escalates and oil prices fall dramatically, we could see 4.10 to possibly 4.15 on USD/MYR(Malaysian Ringgit) in an overshoot,” he told Xinhua in an email.
However, in the case of the tension over international trade eases and oil prices start to firm up, he believed the US dollar will lose its safe heaven appeal.
“In addition, the market may resume focus on U.S. twin deficits and political risk stemming from midterm elections. Given these views, I would expect the USD/MYR to trade closer to the 3.85 level (by year-end),” he added.
The U.S. dollar rose across the board on Wednesday after the U.S. Federal Reserves chairman Jerome Powell remained optimistic on the U.S. economy outlook, reinforced the views that the country is on track to rates hike.
Meanwhile, the oil price remains flat at 71.73 U.S. dollar per barrel on Wednesday as the increased oil production from U.S., Saudi Arabia, Russia, and slow oil demand remain concerns for the market.