[ad_1]
KUALA LUMPUR: The ringgit rose to the strongest level since July 2018, erasing its annual losses driven by the virus.
The currency rose as much as 0.3% to 4.0483, as it broke the previous year’s high of 4.0515 against the US dollar reached in January. The gains came amid a weak dollar and a recent surge in crude prices.
The ringgit has risen with its Asian peers this quarter as the dollar weakened and risk assets were boosted by the developments of the Covid-19 vaccine.
A relief from domestic political tension also helped, after Prime Minister 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 (ANZ).
“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 and given the strong historical correlation,” ANZ’s Asia Research Head Khoon Goh said earlier. 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.
