Ringgit continues downtrend against US dollar amid risk-off sentiment

 

KUALA LUMPUR: The ringgit continued its downtrend against the US dollar at the close today as the greenback continued its ascent on safe-haven asset demand ahead of the release of the minutes of the US Federal Open Market Committee (FOMC) meeting later today.

Expectations of more hawkish signals from the FOMC weighed on most Asian currencies, an analyst said.

At 6 pm, the local currency fell to 4.6820/6855 against the US dollar from Monday’s close of 4.6720/6745.

SPI Asset Management managing partner Stephen Innes said the ringgit also traded weaker as the global risk sentiment took another dive after the Bank of England said it was stepping away from buying bonds to avert a financial crisis in the United Kingdom (UK).

"But without the bank's support, the UK tumult could eventually manifest into global contagion risk and send all flows under the umbrella of the safe-haven dollar even at this highly expensive level and this is why (US) dollars are in demand this week.

"Volatility in UK assets is denting cross-asset risk appetite and weighing on demand for what is perceived as a riskier asset in Malaysia,” he told Bernama.

Innes also highlighted that global demand concerns are at the forefront again as the International Monetary Fund (IMF) cut its global GDP growth outlook to 2.7 per cent from 2.9 per cent, flagging a broad-based global slowdown.

"With Asian exports struggling per the recent Korean trade data, which is a keen bellwether for global demand, we could be on the precipice of an export recession in Asia, which is not great for exporting nations like Malaysia when global growth slows,” he added.

Meanwhile, the ringgit was traded mostly lower against a basket of major currencies, except the Japanese yen.

The local note fell against the British pound to 5.1825/1864 from 5.1607/1635 at Monday's close and depreciated vis-a-vis the euro to 4.5453/5487 from 4.5314/5338 yesterday.

It slipped versus the Singapore dollar to 3.2595/2622 from 3.2472/2491 on Monday but strengthened against the Japanese yen to 3.1987/2014 from 3.2059/2079 previously. - Bernama