The ringgit weakened against the US dollar as surging oil prices and Middle East tensions drove safe-haven demand for the greenback, says an analyst
KUALA LUMPUR: The ringgit opened lower against the US dollar on Monday as heightened risk aversion strengthened the greenback. This followed a surge in Brent crude oil prices to US$107.04 per barrel.
At 8 am, the local currency slipped to 3.9550/9800 against the greenback from Friday’s close of 3.9425/9535.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Brent had risen a sharp 37.7% to US$107.04 per barrel from US$77.74 a week earlier. He attributed the spike to geopolitical tensions after Iran named Mojtaba Khamenei as its new supreme leader.
“Following the risk-off sentiment, the US Dollar Index (DXY) rose 0.52% to 99.496 points,” he told Bernama.
He said emerging market currencies, including the ringgit, are likely to remain weak in the near term amid fragile market sentiment.
Risks of a wider regional conflict in the Gulf have intensified after Bahrain’s water desalination plant sustained material damage in an Iranian drone attack. The United States and Israel are also expected to escalate military action against Iran.
“In that sense, economic data may have taken a back seat as unfolding events in the Middle East are expected to have a material impact on global inflation and growth,” Mohd Afzanizam said.
Based on technical charts, the prevailing resistance and support levels for the US dollar-ringgit pair are at RM4.0285 and RM3.8800, respectively.
At the open, the ringgit traded mostly higher against a basket of major currencies. It strengthened against the euro to 4.5577/5866 from 4.5634/5762 and edged up against the Japanese yen to 2.4967/5126 from 2.4973/5044 previously.
The local note weakened against the British pound to 5.2621/2954 from 5.2530/2676 at Friday’s close.
It traded mixed against ASEAN currencies, appreciating against the Thai baht to 12.3312/4169 from 12.3392/3810. The ringgit weakened versus the Singapore dollar to 3.0788/0987 from 3.0779/0867.
It also slipped against the Indonesian rupiah to 233.6/235.2 from 232.9/233.6 and eased against the Philippine peso to 6.70/6.75 from 6.68/6.70.
