Outlook bleak for ringgit, say analysts

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PETALING JAYA: The outlook is bleak for the ringgit this year, says an analyst after the Malaysian currency hit a low of RM3.173 to the Singapore dollar yesterday, The Straits Times reported.

Jeremy Cook, chief economist of foreign exchange company World First, believes the ringgit could drop even further.

“Bank Negara Malaysia has not been able to smooth out the ringgit’s depreciation given its weak foreign currency reserves. This leaves traders unwilling to meaningfully back the currency.

“Oil prices should be able to keep the ringgit supported on a terms of trade basis, but we could easily see a run to 3.30,” Cook told the Straits Times, adding that the Singapore dollar’s strength will depend on US trade policies, which still lack clarity.

With the depressed global oil prices, and Malaysia being a major oil producer, the ringgit has taken a prolonged beating against major currencies, according to ST.

Meanwhile, IG market strategist Pan Jing Yi does not see the ringgit making a rebound.

“Any rebound by the ringgit is unlikely this year. With current trends, the Singapore dollar against the ringgit may find 3.10 serving as a support into the end of the year,” she was quoted as saying by ST.

The Singapore currency’s gain against the ringgit has reached more than 2% since the start of the year, when the exchange rate was RM3.1065 to one SGD.

Meanwhile, the Singapore dollar strengthened to S$1.40 against one US dollar.