KUALA LUMPUR: The ringgit extended its downtrend to open lower against the US dollar as most traders kept sideways while closely monitoring developments in the US-China trade dispute, dealers said.
At 9 am, the ringgit was trading at 4.2020/2070 against the greenback from 4.2010/2050 on Monday.
A dealer said the losses, however, were limited by the improved oil prices on talks that the US and China signalled de-escalation of the trade spat they had intensified at the end of last week.
Brent crude was trading at 0.65 per cent better at US$58.50 per barrel at the time of writing. "Regional currencies should benefit from the positive trade-sensitive environment today.
"There will be an air of caution though in Asia, as nervousness persists about US President Donald Trump's social media account changing sentiment negatively as quickly as it recovered,” said OANDA’s Asia Pacific senior market analyst Jeffrey Halley in a note. The ringgit was however traded a bit better against other major currencies.
It slightly improved against the yen to 3.9690/9749 from 3.9715/9764 and versus the euro to 4.6646/6719 from 4.6698/6760 previously.
The local unit was marginally higher against the Singapore dollar at 3.0261/0308 from 3.0267/0300 and vis-a-vis the British pound at 5.1319/1384 from 5.1412/1478. - Bernama
Ambank research believes the Chinese yuan could face three scenarios in light of the escalation of trade tariffs on its US exports.
In the event of a full-blown trade war, the yuan is expected to depreciate 10%-12% from its current level of 7.15 in a move to offset the tariff impact.
The research house expects the ringgit to drop by 8% to10% from the current level of 4.20 to a low of 4.53 to 4.62 against the dollar in such a scenario.
In the second scenario, there may be a gridlock in the trade war where the yuan may be range-bound against the dollar, which would also see the ringgit being range-bound from 4.18 to 4.25 against the dollar.
In the final scenario, a trade deal would see the yuan appreciate gradually against the dollar to 7.05-7.08 against the dollar.
The ringgit would then be expected to hover in the 4.12 to 4.15 range.
"We remain cautious on MYR and expect the pair to trade between our support level of 4.1861 and 4.1957 while our resistance is pinned at 4.2106 and 4.2204," it said in its outlook for the day.