KUALA LUMPUR (May 28): The ringgit is expected to gravitate to the higher end of the current RM3.95 to RM4.00 of support and resistance zone, as Malaysia deals with managing the recently uncovered government debt of RM1 trillion, according to foreign exchange firm Oanda.
“My guess, since when dealing with political risk is a calculated guess given political risk is so very very difficult to quantify,” Oanda Head of Asia Pacific (APAC) Trading Stephen Innes said in a note to clients today.
“Local political thunder clouds remain threatening, but expect external factors to drive momentum where emerging market currencies, in general, continue to fall under pressure as the US dollar remain well positioned versus the Euro heading into the weekend,” he added.
The ringgit has been on downward trend since the last two months and depreciated by 3.2% from RM3.86 on March 28 to RM3.9835, as at 10:40am today, Bloomberg data revealed.
Since the historic 14th general election on May 9, which ousted the 61 year rule of Barisan Nasional coalition, the ringgit has lost 0.76%.
“Oil prices look very heavy both from a fundamental and technical perspective suggesting we may be coming to an end in the bull market run. And this could weight on the ringgit sentiment,” Innes said.
He added that the potential increase in Organization of the Petroleum Exporting Countries (OPEC) output to counter global supply concerns due to Venezuela and Iran could lead to a breakdown in OPEC or Non-OPEC compliance.