KUALA LUMPUR (March 13): The ringgit depreciated to its weakest level against the US dollar at 4.2957 so far today after the US dollar strengthened on demand for haven currencies at a time when the Covid-19 pandemic and lower crude oil prices have resulted in world economic uncertainties.

Such sentiment hit world equity and crude oil markets as investors weighed the economic impact of the Covid-19 outbreak and as the Russia-Saudi Arabia crude oil price war led to concerns of additional supply of the commodity.

The ringgit has also weakened in tandem with lower crude oil prices at about US$30 a barrel now because Malaysia is a net oil exporter. At the time of writing, the ringgit was traded at 4.2808 against the US dollar after changing hands between 4.2788 and 4.2957 so far today.

Over the last one year, the exchange rate was between 4.0520 and 4.2957.

Malaysian Rating Corp Bhd (MARC) wrote in a note today that it expects an increased focus on the ringgit as the currency's performance affects business and consumer confidence and, in turn, the real economy. 

"Historically, the ringgit moves in tandem with crude oil prices. In general, lower crude oil prices are associated with a weaker ringgit. 

"Nevertheless, history shows that while a sustained weakness in crude oil prices will dampen ringgit sentiment, a short-term oil price war will not likely have a lasting or significant impact on the currency. Again, the key to the future trend of the ringgit will be the duration crude oil prices remain below their historical average,” MARC said.

Reuters reported that the US dollar held its ground as investors nervous about systemic risks drove demand for the world’s reserve currency. 

It was reported that majors stabilised after furious dollar buying overnight, with the euro finding footing around US$1.1200 and the Aussie recovering to US$0.6300. 

"Emerging market currencies were punished: the won and baht dropped as far (as) 1% (against the US dollar) and the rupiah 2%,” Reuters reported.

At time of writing, the baht weakened to 31.8080 against the US dollar. The exchange rate so far today was between 31.6740 and 32.1020.

The Singapore dollar strengthened to 1.4080 against the US dollar after weakening earlier today. The exchange rate so far today was between 1.4063 and 1.4137.

Crude oil prices were set for their worst weekly drubbing since the 2008 financial crisis, despite rising over 3% on Friday, as investors fretted over evaporating demand from the coronavirus pandemic and a production ramp-up by top producers.

It was reported that Brent crude was up US$1.12, or 3.4%, at US$34.33 a barrel by 0728 GMT after falling more than 7% on Thursday. For the week, it was reported that Brent is set to fall around 24%, the biggest weekly decline since December 2008, when it fell nearly 26%. 

"US West Texas Intermediate (WTI) crude rose US$1.17, or 3.7%, to US$32.66 per barrel after falling more than US$1 earlier in the session. WTI is set to drop nearly 21% this week, also the most since the height of the financial crisis,” Reuters said.