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KUALA LUMPUR: The ringgit rose to its strongest level since July 2018 against the US dollar, erasing its annual losses driven by the virus.
The currency rose to 4.0465 at 2.50pm as it broke the previous high of 4.0515 against the dollar reached in January.
The gains came amid a weak dollar and a recent surge in crude prices. Brent rose to a high of $ 50 a barrel.
The ringgit has risen with its Asian peers this quarter as the dollar weakened and risk assets were boosted by developments in the Covid-19 vaccine.
A relief from domestic political tension also helped, after Prime Minister Tan Sri Muhyiddin Yassin survived a key test of his leadership.
The next key level for the ringgit would be 4 to the dollar, according to Australia and New Zealand Banking Group Ltd.
“A weaker dollar is a key part of the ringgit’s strength, with the Chinese yuan’s strong streak also helping to lift the currency, given the strong historical correlation,” ANZ Asia Research Head Khoon Goh said earlier. that the ringgit reached the maximum. .
“An improved global outlook has led to an improvement in oil prices.”
While the strength of the currency can be seen as a vote of confidence, it also risks damaging Malaysia’s export-dependent economy, which is slowly recovering from its biggest contraction in more than two decades.
A revival in bond inflows could contribute to the ringgit’s upward trajectory, as the search for yield draws global funds into emerging Asian debt. – Bloomberg
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