Ringgit rises strongly against greenback on solid economic data
KUALA LUMPUR: The ringgit was significantly higher against the US dollar this morning, touching a level it had not seen since July 2016, as sentiment towards the local unit improved on the back of the country’s solid economic growth.
At 9.16 am, the local unit stood at 3.9750/9780 against the greenback from 3.9850/9900 at the close yesterday.
A dealer said the ringgit has been undervalued for quite some time and given the release of promising economic data recently, it had started to trade towards its fair value.
Meanwhile, Kenanga Research said Malaysia’s industrial production index (IPI) registered a convincing growth of five per cent year-on-year in November, which surpassed its expectation of 4.3 per cent and Bloomberg’s median consensus of 4.6 per cent.
“With the upbeat IPI data in November, we might see a relatively strong fourth quarter 2017 gross domestic product (GDP) growth. We therefore maintain our GDP forecast of 5.5 per cent for Q4 and 5.8 per cent for the full year of 2017.
“The higher-than-expected IPI growth may suggest that the economic growth trajectory could remain well above its potential or more than five per cent in Q4, bolstering the case for Bank Negara Malaysia to raise the overnight policy rate by 25 basis points as early as the first quarter 2018,” it said in a note here today.
Meanwhile, the ringgit traded lower against a basket of major currencies.