Thursday 28 Mar 2024
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KUALA LUMPUR (April 21): The ringgit touched an intra-day low of 4.3955 against the US dollar in early trade today, as the latest oil market havoc where traders dumped barrels in absence of demand sparked concerns over impacts on the Malaysian economy, where a fifth of federal revenue comes from oil.

The ringgit opened lower at 4.3790 against the greenback today, and slid further before paring down some losses to trade at 4.3905 at the time of writing. Year-to-date, the ringgit had lost 7% against the US dollar.

The oil market saw history yesterday when the West Texas Intermediate (WTI) futures for May contract closed in the negative territory at -US$37 per barrel.

This means that traders are paying to get oil that they will receive in May off their hands as the global Covid-19 lockdowns cut demand to levels not seen before.

At 12.30pm, the June futures were still holding up at around US$22 per barrel, while Brent crude oil futures trade at US$26 per barrel.

The oil conundrum adds another headwind to the ringgit, on top of the Covid-19 economic shutdown that is expected to result in a contraction in Malaysia’s gross domestic product for 2020.

Nevertheless, the local currency held steady against other currencies, strengthening against the Singapore dollar (3.0749/3.0880), the British pound (5.4392/5.4608), and the Australian dollar (2.7604/2.7836).

Malaysia performed relatively well against Singapore and the UK in terms of the handling of the Covid-19 outbreak, as new daily cases appear to be plateauing while daily recoveries have exceeded new cases for more than a week now.

The global economic uncertainties have got people chasing the US dollar, which is driving the greenback higher even as the US Federal Reserve is in the midst of a massive quantitative easing to address the resulting liquidity crunch.

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