KUALA LUMPUR: The ringgit extended its upward momentum of last week to settle higher against the US dollar and a basket of currencies today, ahead of the signing of a “phase one” trade deal between the US and China later this week.
At 6pm, the ringgit stood at 4.0610/0640 against the greenback from 4.0750/0780 at Friday’s close.
AxiTrader chief Asia market strategist Stephen Innes said the signing of the trade deal will give a boost to Asean exporters, equity/bond inflows and sensitive currencies like the ringgit.
“The ringgit was undervalued relative to regional peers, so we are starting to see the catch-up unfold, even more so as the yuan veers on a bullish tack ahead of the signing of the ‘phase one’ trade deal.
“Ringgit traders are in a riskier mood as the yuan, Asia’s key bellwether, is trading on an even keel, which bodes well for Asean currencies in general to start 2020,” he said.
Innes feels the ringgit will remain a bullish sleeper for the first half of 2020.
With low currency volatility, investors’ yield-seeking appetites are increasing, he said, adding that the US payrolls report could also boost demand for higher-yielding assets with the prospects of a US Federal Reserve rate cut.
“Don’t be surprised if the market starts to factor in one or possibly two Bank Negara Malaysia (BNM) rate cuts if inflation remains tepid, and even more so if the US Federal Reserve Board introduces an average inflation target,” he said.
Overall, the ringgit was traded higher against other major currencies.
It went up against the Singapore dollar to 3.0146/0177 from 3.0194/0219 at Friday’s close, and appreciated against the Japanese yen to 3.6965/6999 from 3.7160/7198 previously.
The local note strengthened against the British pound to 5.2675/2730 compared to 5.3244/3299 and increased against the euro to 4.5130/5179 versus 4.5216/5254 last Friday. – Jan 13, 2020 Bernama
