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KUALA LUMPUR, Nov 29 (Bernama): The ringgit’s bullish momentum against the US dollar will likely continue as of Monday (Nov 30), thanks to the weaker dollar bias, stable crude oil and positive vaccine developments Covid-19. said the dealers.
Axi’s chief global market strategist Stephen Innes said the local currency could test the 4.05 level if Brent crude hits $ 50 next week.
He said oil prices had cut earnings ahead of the meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC +) next week on reports of some breakthroughs in the ranks.
Saudi Arabia and Russia tried to encourage oil producers to extend the quota cut, but Iraq, Nigeria and the United Arab Emirates wanted to pump more barrels.
“As long as OPEC agrees to extend its current production quotas, the ringgit should continue to trade in the lead as the market continues to expect the US dollar to weaken towards the end of the year.
“This is in view of the moderate combination of former Federal Reserve Chair Janet Yellen, who has been chosen by President-elect Joe Biden as his new Treasury Secretary, and current President Jerome Powell,” he told Bernama.
From Friday to Friday, the ringgit appreciated to 4.0670 / 0710 against the US dollar, its highest level in almost 11 months, compared with 4.0900 / 0940 the previous week.
FXTM market analyst Han Tan said the ringgit was Asia’s second best performer for the week, behind the South Korean won, as regional currencies continued to take advantage of the weak US dollar.
He said Thursday’s Budget 2021 vote propelled the ringgit to its strongest level against the dollar since January, allowing the local currency to erase all of its annual losses against the US dollar that had been incurred since the heyday of the pandemic.
Ringgit gains were helped by rising oil prices, as well as risk sentiment stemming from positive developments around the COVID-19 vaccine.
“Markets anticipate that the group of major oil producers will delay plans to restore supply to global markets until March.
“Any other outcome that deviates significantly from the current narrative could trigger massive swings in oil prices and, by extension, potentially also in commodity-linked currencies,” he said.
Tan said the positive surprise in Malaysia’s October trade figures released on Friday, in which exports rose 0.2 percent to RM 91.05 billion, also helped bring the ringgit back below the mark. 4.07 mark against the dollar.
“The US dollar / ringgit is now poised to launch another attempt to break below the 4.05 support level, having been rejected earlier in January 2020 and also in March 2019.
“Overall, the weak dollar bias creates an environment conducive for the ringgit to rediscover pre-pandemic levels, and the recovery in oil prices provides further support for the Malaysian currency,” he added.
Meanwhile, the ringgit traded mostly higher against other major currencies.
It rose against the Singapore dollar to 3.0380 / 0431 on Friday from 3.0434 / 0479 a week earlier, soared against the Japanese yen to 3.9083 / 9133 from 3.9399 / 9445, and strengthened against the euro to 4.8479 / 8543 from 4.8495 / 8559.
However, the local currency fell against the British pound to 5.4319 / 4389 from 5.4295 / 4360 on Friday of last week. – Bernama
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