An analyst said the United States (US)-China trade tensions has continued to dampen the global economy, and the extra tariffs imposed by the US on European Union goods had just added salt to the wound.
“These ongoing uncertainties will further enhance the red flags on global economic growth as mentioned in the recent report by the International Monetary Fund (IMF),” she told Bernama.
She said the onset of recession fears and signs of economic slowdown were similar to the signs which preceded the financial crisis a decade ago, adding that the ringgit would need a strong local catalyst to push it on an upward momentum.
Recently, the IMF lowered its 2019 global growth forecast to three per cent, estimating that the US-China trade tensions would cumulatively reduce the level of global gross domestic product by 0.8 per cent next year.
“As global growth slows, oil prices are also affected as demand would be reduced, leading to a decline in the daily oil price,” she said.
Meanwhile, Hong Leong Bank Research said on a week-on-week basis, the ringgit reached an intra-week low of 4.1962 due to worsening economic data as well as the anticipation of further rate cuts by the US Federal Reserve.
“The ringgit has capitalised on the weakness of the US dollar to be stronger compared to last week. However, the ringgit would require further catalysts to drive it past that short term technical level,” it said.
It added that following the lack of local events, global factors are expected to continue driving USD-MYR to trade within the 4.1650-4.2050 range for the week ahead.
The ringgit ended the week slightly lower against the greenback at 4.1850/1880 compared with last week’s 4.1840/1870.
The local currency was traded mostly lower against a basket of other major currencies on Friday.
It slid against the Singapore dollar to 3.0644/0670 from 3.0438/0471, declined versus the euro to 4.6571/6621 from 4.6103/6153 and fell against the pound to 5.3999/4042 from 5.2292/2346 last Friday.
However, the local unit rose to 3.8518/8553 vis-a-vis the yen from 3.8691/8729 previously. — Bernama
Source: The Malay Mail Online