PETALING JAYA: The ringgit depreciated as much as 0.38% to a low of 4.1030 today, the lowest since the end of January.
This was in line with the downward pressure on the regional currencies, driven by higher risk appetite for the US dollar.
The local unit ended the day at RM4.0995, 0.29% lower than last Friday’s 4.0875.
According to Reuters, Asian currencies sank today as a rebound in US payrolls data supported the greenback, offsetting optimism of a Sino-US trade deal and further China policy stimulus.
“Risk appetite for the dollar increased after figures on Friday showed US nonfarm payrolls rose by a solid 196,000 in March, topping expectations and putting to rest fears of a sharper slowdown in the world’s largest economy,” Reuters reported.
The South Korean won fell to a more than five-month low and the Chinese yuan was largely flat while the Taiwan dollar softened ahead of a projected slump in March exports, said Reuters.
It said that currencies of oil-import reliant countries such as the Indian rupee, Indonesian rupiah and Philippine peso also took a hit after oil prices touched a five-month high.
UOB senior economist Julia Goh maintained her view of 4.06 for the ringgit by mid-year and 4.11 by year-end amid sustained risk aversion.
“USD/MYR is holding in a tight range of 4.06-4.08 as growth risks take centre stage. The Asia Development Bank predicted that growth in Asia’s developing economies will fall to its slowest pace in nearly two decades and the World Trade Organisation cut its global trade projection for 2019 to the lowest level in three years,” she said in a macro note today.
Although there are some positive catalysts for emerging markets – such as the dovish shift from the Fed and more constructive talks between China and the US – she noted that Asia currencies continue to drift sideways against the US dollar amid the bearish global outlook.
In his commentary last Friday, FXTM research analyst Lukman Otunuga said the ringgit’s performance this week remains primarily driven by global factors.
“US March inflation data and Fed chair Jerome Powell’s speeches in the week ahead could offer more clues on the direction of US interest rates and potentially spark more dollar moves. Global risk sentiment may also lean on the EU’s emergency Brexit summit tomorrow – a key event risk for Pound traders – to ascertain the likelihood of an orderly Brexit,” he said.
“China’s March trade data later in the week will also be stacked against rising hopes of a US-China trade deal, and should both unveil positive surprises, that could raise risk-on sentiment and prove positive for Asian currencies, including the ringgit,” he added.
Source: The Sun Daily