Crude oil price rise boosts ringgit

At 6pm, the local currency stood at 4.0080/0130 versus the greenback, from yesterday’s close of 4.0140/0200. — AFP pic
At 6pm, the local currency stood at 4.0080/0130 versus the greenback, from yesterday’s close of 4.0140/0200. — AFP pic

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KUALA LUMPUR, Jan 6 — The ringgit ended higher against the US dollar today, boosted by rising crude oil prices and the weaker greenback amidst the risk-on market sentiment.

The US dollar index kept losing its ground, trading at a fresh low of 89.20 following rising speculations of a Democrat win in Georgia, dealers said.

At 6pm, the local currency stood at 4.0080/0130 versus the greenback, from yesterday’s close of 4.0140/0200.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the ringgit appreciation was very much in tandem with the rise in oil benchmark Brent crude, which increased to more than US$53 (RM213) per barrel today.

He said the crude oil prices had jumped today after the Organisation of the Petroleum Exporting Countries and its allies (Opec+) decided to reduce the production quota for the month of February and March, with Saudi Arabia announcing an additional cut of one million barrels per day (mbpd).

This would bring the total production cuts to 8.125 mbpd and 8.05 mbpd for February and March, respectively, this year, he noted.

“This has helped the ringgit, given the positive correlation between crude oil and ringgit. Therefore, Malaysian ringgit remained constructive at the moment,” he told Bernama.

Meanwhile, Axi chief global market strategist Stephen Innes said the ringgit received a boost from the higher oil prices today after Saudi Arabia committed to shouldering a larger piece of the production cut quota.

“That, coupled with the strong likelihood of a Democratic sweep of Congress, has seen the dollar weaken broadly on the expectations of more stimulus to come.

“Both favourable outcomes should see the momentum arc bullishly towards the RM4.00 psychological level,” he added.

Meanwhile, the ringgit was traded mostly lower against other major currencies, except the Japanese yen.

It fell against the Singapore dollar to 3.0440/0480 from 3.0425/0482 yesterday, slipped versus the euro to 4.9443/9516 from 4.9256/9341 and weakened against the British pound to 5.4685/4757 from 5.4474/4572 previously.

Conversely, the local note appreciated vis-a-vis the Japanese yen to 3.8954/9022 from 3.9032/9094 yesterday. — Bernama

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