KUALA LUMPUR, Aug 5 — The ringgit ended lower today in line with most emerging Asian currencies, following the escalation of the US-China trade war.
At 6pm, the local currency stood at 4.1770/1800 versus the greenback compared with last Friday’s close of 4.1550/1600.
VM Markets Pte Ltd managing partner Stephen Innes said the ringgit has a tight historical correlation to the renminbi, causing it to slight in line with the Chinese currency plunge due to the trade war escalation.
“Given the mounting global risk environment, currency trader will position for a weaker renminbi which would cause the local note to weaken.
“The situation would only be better if the People’s Bank of China (PBoC) intervenes,” he told Bernama.
Last Thursday, US President Donald Trump announced an additional tariff on China’s goods, which would take effect on Sept 1, sending a negative signal to markets worldwide.
Meanwhile, FXTM chief market strategist Hussein Sayed said following volatility in China market, the renminbi broke above seven per dollar for the first time since 2008, after PBoC set the midpoint at 6.9225.
This is the first time since May 2008 that the Chinese currency traded above the key psychological level of seven.
“The currency tool may be very effective as it significantly offsets the impact of US tariffs.
“If the Chinese currency falls by another 8.0 per cent from the current level, the 10 per cent tariffs paid by US importers will be offset by the renminbi’s weakness,” he said.
At the closing bell, the ringgit also traded lower against a basket of major currencies.
It slid against the Singapore dollar to 3.0231/0264 from Friday’s 3.0168/0215 and weakened against the yen to 3.9343/9389 from 3.8864/8922.
Vis-a-vis the pound, the local unit fell to 5.0684/0741 from 5.0379/0457 and depreciated against the euro to 4.6561/6611 from 4.6104/6176. — Bernama
