KUALA LUMPUR: The ringgit extended its downtrend to close lower against the US dollar today primarily due to the extremely depressing news flows on the oil market, said an analyst.
At 6 pm, the ringgit dropped to 4.3880/3950 against the US dollar from 4.3700/3770 at Monday’s close.
AxiCorp global chief market strategist Stephen Innes said the ringgit, which is trading near the lower end of the range, will continue to be pressured on news of oil oversupply in the market.
“There is a perfect storm for near contract delivery as I think the cost of storing oil in May exceeds the economic value of oil in June unless there is an intervention from the Organisation of the Petroleum Exporting Countries (OPEC) and G20 countries,” he said.
The crude oil markets were in chaos when the overnight US crude oil futures plunged to below US$0 for the first time in history.
As at the time of writing, benchmark Brent crude lost 18.15% to US$20.93 per barrel from its previous session.
Malaysia, being a net exporter of crude oil and petroleum products, is heavily reliant on the price movement of this commodity.
Besides, Innes said, the US dollar, which is starting to firm up in Asia, is also usually a bad sign for local equity market inflows, suggesting that this could be a bad week for the ringgit.
Meanwhile, the ringgit was traded mostly higher against other major currencies.
It depreciated against the yen to 4.0841/0918 from 4.0587/0663 on Monday but rose against the Singapore dollar to 3.0676/0734 from 3.0751/0811 yesterday.
Vis-a-vis the pound, the local note improved to 5.4122/4226 from 5.4524/4616 yesterday and against the euro, it marginally appreciated to 4.7526/7620 from 4.7550/7644 at Monday’s close. – April 21, 2020, Bernama
