KUALA LUMPUR, Jan 10 — The ringgit had strengthened against the US dollar at the close today as the latter declined in response to the disappointing United States’ (US) December jobs report.
At 6pm, the ringgit was traded at 4.1990/2020 against the greenback from 4.2070/2080 at the close last Friday.
In a note, UOB global economics and markets research said it is expecting more volatility this year, citing the overtly hawkish US Federal Reserves (US Fed) and emerging new Covid-19 variants as top risk factors exacerbating volatility in emerging markets’ (EMs) capital flows, including Malaysia.
“Headwinds from new variants of the coronavirus, global supply chain disruptions and China’s regulatory risks further clouds the growth and inflation outlook.
“With elevated price pressures amid tighter labour market conditions, central banks and policymakers that adopt inflation targeting or have dual mandates to manage inflation and growth have started normalising monetary policies,” it said in a note.
Meanwhile, the extended market volatility could prevail, given the risk that the US Fed may accelerate monetary policy normalisation through accelerated tapering of bond purchases, faster rate hikes or balance sheet reduction.
“This would lead to a stronger US dollar and tighter global monetary conditions that in turn, would affect portfolio flows into EMs,” it said.
Back home, a higher public debt, as well as policy and political uncertainty could weigh on Malaysia’s capital flows and currency outlook.
“The ringgit depreciated the most in five years against the US dollar by 3.5 per cent to 4.1665 last year.
“We expect further US dollar strength with USD/MYR projected at 4.30 by end-2022,” it added.
Meanwhile, the local currency was traded mixed against a basket of other major currencies.
The ringgit had strengthened against the Japanese yen to 3.6302/6331 from 3.6320/6336 last Friday and appreciated against the euro to 4.7554/7588 from 4.7602/7640 previously.
However, it depreciated versus the Singapore dollar to 3.0987/1013 from 3.0958/0981 on Friday and eased vis-a-vis the British pound to 5.7018/7059 from 5.6999/7037 previously.
— Bernama
