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Analyst says ringgit could surpass 4.8 against the US dollar if China allows yuan to depreciate

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Publish date: Fri, 12 Apr 2024, 03:57 PM

KUALA LUMPUR: Analysts say the ringgit is in for another bout of weakness with a depreciation in the Chinese yuan possibly pushing the ringgit to surpass 4.8 to the US dollar levels, amid a delay in US rate-cuts.

The ringgit traded at 4.7650 against the US dollar at noon today, down from 4.7490 against the dollar at noon on April 9, 2024.

SPI Asset Management managing director Stephen Innes said the local note may continue to weaken until the Federal Reserve signals a rate cut, a move that will only happen in the event of inflation easing or a significant deterioration in US economic data, possibly in the fourth quarter. 

Higher-than-expected US inflation has dimmed hopes for a June rate-cut.

"With the US dollar acting as one wrecking ball and the potential for a weaker yuan acting as another, Asian currencies could face significant pressure," he told Business Times.

Innes said two scenarios could play out, the first, if the People's Bank of China (PBoC) allows the yuan to depreciate, it could result in the US dollar surpassing 4.80 against the ringgit.

"Secondly, if Federal Reserve rate cuts are postponed, the US dollar may fluctuate between 4.73 and 4.78 against the ringgit," he noted.

Tradeview Capital Sdn Bhd vice president Tan Cheng Wen agreed that the ringgit is likely to see continued weakness in the near term.

"The current situation may end up not being the tailwind that we had expected to strengthen the ringgit as the interest rate differential will not be narrowed in the short term," he said.

Tan added that US inflation data coming in stronger than expected, the futures contracts tied to the fed-funds rate is projecting rates to end at around five per cent.

He said this implies just one or two rate cuts this year. 

"This is in stark contrast to the initial six to seven rate cuts that the street was expecting back in January this year," he told Business Times.

Nevertheless, Tan said the long-term outlook of the ringgit should bode well for the local note once these interest rate differential rates narrow.

He said the ringgit's strength will be coupled with the execution of the many frameworks and blueprints such as the National Energy Transition Roadmap (NETR), New Industrial Master Plan 2030 (NIMP) and Madani framework to boost foreign direct investment (FDI).

 

https://www.nst.com.my/business/economy/2024/04/1037110/analyst-says-ringgit-could-surpass-48-against-us-dollar-if-china

Discussions
Be the first to like this. Showing 13 of 13 comments

Income

Don’t worry, be happy

1 month ago

arv18

1gram of Gold = RM360

Better to measure against GOLD than USD.

Fasten your seatbelts boys and girls!

1 month ago

arv18

Keep chatting about Socks and Shoes with certain things written to distract everyone from real issues.

unconstrained credit = > compress loans (multiple financing), 100K - 200K "Cashback", student loans, credit card debt, Budget 2024 RM90 billion development expense = very high inflation.

1 month ago

EngineeringProfit

From socks to shoes and now carpet.

Yes. It's all part of the diversion strategy. When musangs are assigned to jaga reban, this is the end results: The staggering losses incurred by Felda in 2022, amounting to RM1 billion, nearly double the losses from the previous year, highlight the consequences of entrusting unworthy individuals with leadership roles. The auditor-general's report sheds light on the mismanagement and poor decision-making that have plagued Felda, ultimately leading to dire financial outcomes.

1 month ago

EngineeringProfit

More reserved bullets for diversion strategy: clocing vernacular schools, forcing young children to scribble khatoon, etc etc. Many more to recycle.

1 month ago

Income

What do you do when you can’t solve real rakyat issues? U play RRR issues lah. Or else people say you makan gaji buta lah. Make all busy with petty issues lah.

1 month ago

Income

Make issues, in order have issues to solve and show your supporters, you are really working lah. How?

1 month ago

Income

Like Hairy must do podcast every now and then to show his relevancy as former poli-tikus. Make noise to show your busyness lah. Oh else people forget about you lah.

1 month ago

arv18

There is too many billions of ringgit leaving the country through SG, just like our high skilled human resource!

1 month ago

EngineeringProfit

Yes, make some easy-to-solve cavemen's level of issue. Else what? You want some Industrial Revolution 5.0 initiatives????

Posted by Income > 5 minutes ago | Report Abuse

Make issues, in order have issues to solve and show your supporters, you are really working lah. How?

1 month ago

arv18

Why be bothered with RRR issues and politics/politicians? Its all a convenient distraction.

Got to pay attention to yourself and investments. Don't waste time with unnecessary "NEWS" used to manipulate simple-minded ppl.

Position yourself for extremely painful high inflation.

1 month ago

EngineeringProfit

Not a single right-minded rakyat should have concern. In the context of cutthroat politics and attention-seeking publicity, forgiveable human mistakes often get blown out of proportion, sparking a never-ending cycle of heightened emotions within an intolerant and unforgiving community. This toxic environment blurs the lines between truth and manipulation, paving the way for a dangerous dance of rhetoric, boycotts, and deceit. Individuals or groups, driven by their own agendas, manipulate facts, distort reality, and exploit public vulnerabilities, further deepening societal divisions, eroding trust in governance, and obstructing meaningful dialogue, genuine empathy, and lasting harmony

1 month ago

stockraider

Yes keep in investing in quality export sector like inari.....u would not regret loh!

Alternatively u can by Insas as a cheaper proxy with better value loh!

1 month ago

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