KUALA LUMPUR — The Ringgit reacted positively and strengthened by as much as 0.2% against the US dollar during the tabling of Budget 2021 by the Finance Minister, placing it at its strongest level against the US Dollar in seven weeks.
FTXM market analyst Han Tan said the local currency alongside all major Asian currencies posted a weekly advance against the US dollar after the Greenback gave up its initial post-election gains.
He said Bank Negara’s decision to keep the overnight policy rate unchanged earlier in the week, which was in line with market expectations, also helped anchor the ringgit’s performance for the period.
“Positive surprises in Malaysia’s economic data releases that bookend the coming trading week, being the September industrial production and the third quarter (3Q) gross domestic product prints, could buffer expectations surrounding the economic recovery and offer support for the currency.
“The domestic economy is expected to have contracted by 6.5% in Q3, which would be better than Q2 performance which contracted by 17.1%,” he added.
For the week ahead, the ringgit and dollar conversion could explore more of its downside, pending any major shifts in the US elections tally.
“Confirmation of a Biden win could see the Dollar moderate further, potentially carving a path towards the 4.11 mark for dollar-ringgit as it last did in mid-September.
“However, should President Trump manage to turn the tables and claim legitimate victory, or if his legal challenges to the votes gain meaningful traction, that could restore some of the gains in the greenback and prompt ringgit-dollar to retest the 4.17 resistance area,” he added.
On a Friday-to-Friday basis, the ringgit rebounded against the US dollar to 4.1275/1325 from 4.1530/1570 in the previous week.
The local currency weakened against all other major currencies.
It declined against the Singapore dollar to 3.0624/0668 from 3.0427/0468 last Friday, eased versus the yen to 3.9918/9978 from 3.9757/9814 previously.
The ringgit fell vis-a-vis the British pound to 5.4231/4313 from 5.3806/3866 a week earlier and weakened against the euro at 4.8923/8995 from 4.8470/8529 previously. — Bernama, November 7, 2020
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