KUALA LUMPUR (Aug 12): The ringgit strengthened below RM3 against the Australian dollar today in an apparent reaction to higher crude oil prices, which are seen supporting the Malaysian currency as Australia's economy contends with the impact of the Covid-19 pandemic.

At 12,01pm, the ringgit traded at 2.9887 versus the Australian dollar. The exchange rate so far today was between 2.9867 and 3.0017.

The ringgit-Australian dollar exchange rate is closely watched due to Australia being a popular holiday and a higher education destination for Malaysians.

"Despite the de-escalation of trade talk risk, the ringgit remains susceptible to external factors, including the fall in oil prices and higher US yields, which could temper foreign bond inflows,” AxiCorp Financial Services Pty Ltd chief global markets strategist Stephen Innes wrote in a report today.

Against the US dollar, the ringgit, however, weakened to 4.1980 at about 12:25pm. Compared to the Singapore dollar, the ringgit appreciated to 3.0528.

Globally, it was reported that crude oil prices moved higher on Wednesday after an industry report showed that US inventories of crude fell more than analysts had expected, bolstering hopes that fuel demand in the world's biggest economy can weather the coronavirus pandemic.

Brent crude was up 15 cents, or 0.3%, at US$44.65 a barrel by 0206 GMT, after falling around 1% on Tuesday while West Texas Intermediate oil was up 9 cents, or 0.2%, at US$41.70 a barrel, having dropped 0.8% in the previous session,” Reuters reported.

In Australia, it was reported that Australian shares fell on Wednesday on worries that a worsening coronavirus outbreak in the country's second-most populous state would further slam economic activity.

"The S&P/ASX 200 index fell 0.44% to 6,114.60 points by 0117 GMT, giving up nearly all of Tuesday's gains. The state of Victoria, whose capital city of Melbourne was forced into another lockdown last week, recorded its deadliest day of the pandemic on Wednesday and the biggest daily rise in infections in three days,” the newswire reported.