Ringgit Expected To Ease Further

Published: 2009/02/28

The ringgit is expected to extend its downtrend against the US dollar next week owing to bearish sentiment following weaker-than-expected gross domestic product (GDP) data, dealers said. Economic growth slowed in the fourth quarter to a mere 0.1 per cent from 4.7 per cent in the third quarter resulting in full year growth of 4.6 per cent versus 6.3 per cent in 2007.

"The local currency will continue to be under selling pressure as the prolonged global financial turmoil will deepen the economic slump and may deter foreign investments," one of the dealers said. This would exert further pressure on the local currency.

Most currency traders predict the ringgit to hit RM3.8 per US dollar soon. The decision by Bank Negara Malaysia recently to cut the overnight policy rate by 50 basis points to 2.0 per cent also weighed down the performance of the local currency.

Moving forward, forex players will adopt a wait-and-see attitude ahead of the unveiling of the country's second stimulus package to be tabled at Parliament on March 10. On a week-to-week basis, the ringgit was lower against the US dollar at 3.7020/7070 compared with 3.6770/6790 last Friday.

Similarly, the local unit eased against the Singapore dollar to 2.3964/3018 from 2.3895/3924 previously but it firmed against the Japanese yen at 3.7969/7028 from 3.9213/9247. The local unit declined against the euro at 4.6867/6942 from 4.6268/6304 and weak against the British pound at 5.2446/2528 from 5.2213/2257 previously. - Bernama