PETALING JAYA: The Greenback could potentially weaken in light of the political development in the United States, as the shutdown of government services moved into the third day, spelling good news for the ringgit.
FXTM Research Analyst Lukman Otunuga told SunBiz that the US Dollar could see further loses should the shutdown persist longer than expected as the currency “remains at the mercy of heightened political uncertainty”.
A weakened dollar will not only support the currencies of the emerging market including the local unit, but will also draw investors towards the international bond markets, which will also potentially boost the buying sentiment towards the ringgit.
The ringgit closed marginally higher at 3.933 against the dollar as at 5pm yesterday.
FXTM’s analysis entitled Investors, unmoved by the US government shutdown noted that financial markets appears to be immune to the political developments in US.
The report said although Asian equities traded slightly lower yesterday, the Japanese Yen and gold are flat. Remaining flat is an indication that traders are of the view that the “drama will be over soon.”
Otunuga noted that while responses from financial markets were fairly muted last week, the Malaysian equity market may also be benefiting from its positive economic growth amid a cautious backdrop.
“World shares were mostly mixed on Monday as investors simply discounted the political developments in Washington. While the Malaysian equity markets could be impacted by a sense of caution, the bullish sentiment towards the Malaysian economy could continue supporting the upside momentum,” he said.
Malaysian stocks have risen for eight consecutive weeks and could continue venturing higher amid optimism over steady economic growth,” he added.
Source: The Sun Daily