KUALA LUMPUR: The ringgit closed lower today, once again touching the 4.5 mark against the US dollar due to increased demand for the greenback on the expectation of further interest rate hikes by the US Federal Reserve (Fed) and as the Chinese yuan weakens, analysts said.
At 6 pm, the local currency fell to 4.5010/5045 against the greenback from last Friday’s close of 4.4965/4990.
An analyst told Bernama that with demand continuing to favour the greenback, the ringgit would dip further.
“Investors do not see the ringgit as a competitive currency for now. We think the ringgit may continue to be on a weaker (trend) until the government announces measures to boost the economy,“ she said.
The analyst said there would be a heavy focus on the US this week as traders await the country’s Consumer Price Index (CPI) data.
MIDF Research said that the ringgit depreciation could also be linked to the weakening Chinese yuan and the correction in crude oil prices.
Taking into account the recent weakness in ringgit, the research firm downgraded its ringgit forecast to an average of RM4.38 this year from 4.28 previously.
“We still maintain our assumptions that potential fund flows and the eventual decision by the Fed to slow down the pace of policy tightening from large to more normal hikes will be positive for emerging currencies, including the ringgit, (and they will) appreciate towards the end of the year.
“On that note, we project ringgit to appreciate (from recent lows) towards RM4.35 by end-2022 from the previous forecast of RM4.25,” it said in a note.
Against a basket of major currencies, the ringgit was traded mostly lower. The local unit decreased against the Singapore dollar to 3.2224/2251 from Friday’s close of 3.2189/2209 and fell against the British pound at 5.2549/2590 from 5.2249/2278 previously.
It eased against the euro to 4.5636/5671 from 4.5361/5386 but appreciated against the Japanese yen to 3.1526/1553 from 3.1670/1690 on Friday.-Bernama