KUALA LUMPUR, June 4 — The ringgit is expected to rise against the US dollar after experiencing a depreciation against the currency over the past month as the US dollar is presently under pressure due to various issues surrounding the United States.
AmBank chief economist, Dr Anthony Dass in his forex report today said the US dollar is losing its shine due to ongoing issues such as rising tensions between Beijing and Washington, local political unrest and lack of improvement on Covid-19 recovery in the region.
“The ringgit has depreciated by one per cent to 4.347 against the US dollar in May. However, the current appreciation of the ringgit is driven by the weakening US dollar, strengthening oil prices and growing expectations for a rate cut in July,” he said.
The ringgit is projected high in June at 4.22 against the greenback and low at 4.31.
He said as Malaysia began to reopen its economy post Movement Control Order which will revive both the investors and consumers’ confidence, early data is shedding positive signs, for instance, the manufacturing purchasing managers' index.
“What seems to be the focus now is the investment climate that is being shaped by forces that emerged in May. Many countries began relaxing lockdowns and these have also helped push crude oil prices to the best month on record.
“Optimism is growing over several different vaccines that have been initiated or will soon begin human tests. The hope is that a vaccine may be ready by year-end,” he said.
As at 10.30 am, the benchmark Brent crude was at US$39.37 per barrel.
Dass added that with the second quarter (Q2) growth in general expected to contract sharply, there is a need to set the stage for a recovery in Q3 to validate expectations.
“What is needed now is that the data needs to set the stage for a recovery in Q3 to meet expectations. Such validation will be a good framework on how the market should look at currencies,” he said. — Bernama
