KUALA LUMPUR – The ringgit closed January on a firm note against the US dollar, as the affirmation of Moody’s Investors Service of Malaysia’s local and foreign currency long-term issuer ratings at A3, with a stable outlook, helped boost risk appetite for the local currency.
At the close, the ringgit rose to 4.0400/0450 versus the greenback, from 4.0440/0470 on Wednesday.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the rating affirmation has spurred investors’ confidence towards the country’s fiscal management.
“Back in December, Fitch Ratings had downgraded its rating on Malaysia. So, this latest rating is like a testament to the government’s management of fiscal position.”
Yesterday, Moody’s announced that it had affirmed Malaysia’s local and foreign currency long-term issuer and local currency senior unsecured debt ratings at A3, with a stable outlook.
In a statement, it said the affirmation is underpinned by expectation that the country’s medium-term growth prospects will remain strong, and its macroeconomic policymaking institutions will continue to be credible and effective, providing resilience to the sovereign credit profile.
“These strengths are, under Moody’s baseline assumptions, balanced against the government’s relatively high and increased debt burden, which will leave the government with weakened fiscal strength for some time in the aftermath of the pandemic to public finances.”
Adam said the weaker greenback, which was pressured by trading restrictions on GameStop shares, had partly contributed to lift sentiment towards the local currency.
Against other major currencies, the ringgit was traded broadly higher.
It appreciated against the Singapore dollar to 3.0369/0416, from 3.0491/0520 on Wednesday, and increased versus the Japanese yen to 3.8524/8575, from 3.8956/8996 yesterday.
It also strengthened against the British pound to 5.5207/5291, from 5.5536/5594, and advanced vis-a-vis the euro to 4.8945/9021, from 4.9021/9131 previously.
The local market was closed yesterday for the Thaipusam public holiday. – Bernama, January 29, 2021
