Friday 29 Mar 2024
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KUALA LUMPUR (Sept 14): The ringgit depreciated to its weakest point against the U.S. dollar so far today at 4.1377, after crude oil prices fell as much as 3% in overnight trades.

The ringgit tracks crude oil prices, as the commodity forms a crucial portion of the Malaysian economy.

At 11:39 a.m., the ringgit pared losses at 4.1330. The exchange rate so far today was between 4.1080 and 4.1377.
 
Reuters reported oil prices fell as much as 3% on Tuesday, after the International Energy Agency (IEA) and Organization of the Petroleum Exporting Countries (OPEC) revised forecasts that signaled global crude glut could persist for much longer than expected. Brent crude settled down US$1.22 or 2.5% at US$47.10 a barrel.

Today, Brent futures rose 15 cents to US$47.25 a barrel, while U.S. light crude rose 20 cents to US$45.10, as data from an industry group showed a smaller-than-expected build in U.S. crude stocks.

In Malaysia, Affin Hwang Investment Bank Bhd chief economist Alan Tan told theedgemarkets.com that apart from crude oil, investors were also predicting the direction of U.S. interest rates.

U.S. rate hike sentiment does not bode well for Asian markets, in anticipation investors will shift their money back to U.S. dollar-denominated assets. The U.S. Federal Reserve's Federal Open Market Committee (FOMC) meets this Sept 20 and 21.

Tan said: “The ringgit is being affected by the oil glut report by IEA, where it is expected to extend till next year, signalling the possibility that crude oil prices will trend lower.

“This will further impact the ringgit, which is also seeing the effect of a (potential) interest rate increase by the FOMC," he said.

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