Ringgit continues downtrend as investors snap up greenback

 

KUALA LUMPUR: The ringgit depreciated further against the US dollar and other currencies due to looming concerns over the global financial sector’s health, potential global recession, US debt ceiling risks, an impending decline in energy demand in the West, and a deflationary stagnation in China.

At 6pm, the local note stood at 4.5920/5950 against the greenback compared with Tuesday’s closing of 4.5700/5750.

SPI Asset Management managing director Stephen Innes told Bernama that there had been little significant progress in the debt limit discussions, hence, traders would start pricing in a greater chance of default which affects more than just the primary period of at-risk dates.

“The risk dates are the first two weeks of June,” he said.

It was reported that there is a significant risk that the US federal government could run out of cash sometime in the first two weeks of June, setting the country up for a default.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said the risk-off mode is clearly at the centre stage now with the US debt ceiling remaining the main issue.

“The US Dollar Index has gained further strength to 103.527 points during the day and the ringgit appeared to be weaker against major currencies as investors are shifting towards the safe-haven currency.

“It seems that the US debt ceiling stalemate in 2011 would be the reference point whereby Congress decided to raise the limit on July 31, 2011, two days prior to the expiration,” he told Bernama.

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Due to this situation, he said the rating agencies had revised their rating on the US government by one notch.

At today’s closing, the ringgit depreciated against a basket of major currencies.

It eased vis-a-vis the British pound to 5.6877/6914 from 5.6577/6639 at the close on Tuesday, weakened further against the euro to 4.9470/9502 from 4.9251/9305 and was lower against the Japanese yen at 3.3148/3172 from 3.3006/3044 yesterday.

The local note was also traded lower against other Asean currencies.

The ringgit hit 3.4091/4115 against the Singapore dollar compared with 3.3920/3962 at the close yesterday, surpassing a two-decade low.

It depreciated further versus the Indonesian rupiah to 308.1/308.5 from 307.1/307.7 at Tuesday’s close, slipped against the Philippine peso to 8.23/8.24 from 8.20/8.21 and was down vis-a-vis the Thai baht to 13.2924/3073 from 13.1712/1920 previously. - FMT