KUALA LUMPUR, April 17 — The ringgit closed at a nearly three-month low against the US dollar today, dampened by weak sentiment towards the local currency following the possible downgrade of Malaysian bonds by global index provider, FTSE Russell.
At 6pm, the ringgit fell to 4.1330/1360 against the US dollar from 4.1310/1350 at yesterday’s close.
The local currency was traded at 4.1410/1450 versus the greenback on January 24, 2019.
Phillip Capital Management senior vice-president (investment) Datuk Nazri Khan Adam Khan said concerns over the potential downgrade had influenced investors risk-appetite and offset the weaker US dollar sentiment.
Although the impact might be temporary, he expected the ringgit downtrend to prolong until the end of this week.
“Our foreign fund (selling) has stabilised, so supposedly the outflow will stabilise soon. This concern (FTSE Russell) is just a knee-jerk reaction.
“The government needs to address this concern of bond managers and boost their confidence,” he told Bernama.
In its first Fixed Income Country Classification Review, FTSE Russell has put Malaysia and China under its full Watch List of fixed income markets that will be reviewed for potential changes to their Market Accessibility Levels.
“Malaysia — currently assigned a “2” and included to the WGBI (World Government Bond Index) since 2004, is being considered for a potential downgrade to “1” which would render Malaysia ineligible for inclusion in the WGBI.
“FTSE Russell said it will continue to engage with local regulators and market participants in Malaysia and China to assess the potential changes to a country’s classification,” it said on April 15.
Nazri Khan said the strong economic data from China had helped cushion the sentiment towards the ringgit today.
China’s economy grew faster than expected at 6.4 per cent in the first three months of this year, as stimulus measures began to reflect in the country’s economic activity, thus easing worries over the recovery in the world’s second largest economy.
Meanwhile, the ringgit was traded mixed against other major currencies.
It rose against the Japanese yen to 3.6892/6925 from 3.6923/6963 yesterday, and strengthened versus the British pound to 5.3890/3946 from 5.4033/4102.
The local unit, however, depreciated against the Singapore dollar to 3.0551/0583 from yesterday’s 3.0485/0526 and weakened vis-a-vis the euro to 4.6736/6774 from 4.6639/6688. — Bernama