PETALING JAYA: It is likely that the ringgit will drop to as low as RM4.60 to the US dollar in the near term with the greenback’s domination of currency markets currently, according to a market analyst.
ForexTime Ltd vice-president of corporate development and market research Jameel Ahmad sees the ringgit maintaining a RM4.40 to RM4.50 level over the next few weeks, The Edge Financial Daily reported today.
However, Jameel said the weak ringgit does not reflect in any way the state of the Malaysian economy.
“Don’t be intimidated by the weakening of the ringgit because it’s a global trend. The ringgit is not alone. Literally every global currency is getting hit by the US dollar momentum since Trump was declared victorious,” The Edge quoted Jameel as saying.
According to Jameel, the economy is doing reasonably well despite external elements that have had an impact, namely the strong global growth, decline in trade, prolonged depression in the price of oil and a strong US dollar.
He believes that the projected gross domestic product (GDP) growth of 4% to 4.5% for 2016 could be seen as being stronger than that which has been achieved by developed nations.
“When you combine what is happening on a global level, the Malaysian economy is in quite an envious position,” Jameel was quoted as saying.
He also advised investors to accept the new norm that while emerging markets are on a global slow trend, they are still growing at a better rate than nations in the developed world.
Speaking on the impending demise of the Trans-Pacific Partnership (TPP), Jameel said it should not have a major impact on Malaysia as China were ready to take over the role that the US would have had under the trade pact.
He added that Malaysia should also view the United Kingdom’s withdrawal from the European Union as an opportunity to establish more trade partnerships with the UK.
Meanwhile, the ringgit opened today at 4.46 against the USD. The lowest the ringgit has ever recorded was RM4.71 to US$1, and that was in January 1998, at the height of the Asian financial crisis.
“The US dollar has moved to levels not seen in over 12 years. The US Dollar Index has since traded above 100 points,” Jameel said.
He added that the market would only be able to get a better idea of the direction of the ringgit after President-elect Donald Trump is inaugurated on Jan 20 next year. -FMT