Ringgit slips to 4.055 vs US dollar on MCO 2.0, state of emergency


  • Forex
  • Tuesday, 12 Jan 2021

KUALA LUMPUR: The ringgit slipped lower against the US dollar as investors remain uncertain over the reinstatement of the Movement Control Order (MCO 2.0) and state of emergency.

At 6 pm, the ringgit shed 70 basis points to close 4.0550/0600 from 4.0480/0530 against the greenback.

"It’s about the uncertainty surrounding the MCO and State of Emergency, ” Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid told Bernama.

However, he believes the vaccine roll-out in February should provide a confidence booster going forward.

"But this will take a while as herd immunity could only be reached perhaps towards the third or fourth quarter of 2021, at the earliest, ” he said.

Prime Minister Tan Sri Muhyiddin Yassin announced on Monday that a full-scale MCO restriction order would be reimplemented in major parts of the country, while today, Yang di-Pertuan Agong Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah proclaimed a state of emergency until Aug 1 or when COVID-19 is under control.

Both announcements were aimed at containing the spread of the pandemic.

Regarding today’s trading, Mohd Afzanizam said the US dollar/ ringgit pair was volatile in the morning session with the local note bursting to RM4.0755, as markets were digesting the announcement of the state of emergency.

However, he said in the afternoon session, the currency pair was settling on a firmer footing.

"Perhaps, there is more clarity on how the economic sector would function during the state of emergency and clearly, there was no curfew, suggesting a more palatable human mobility based on what has been prescribed in yesterday’s announcement, ” he added.

Mohd Afzanizam believed the US dollar/ ringgit pair would remain in a range-bound trading in the immediate term.

At the close, the ringgit was also traded lower against other major currencies.

It fell against the Singapore dollar to 3.0535/0575 from 3.0436/0478 on Monday and depreciated against the yen to 3.8927/8978 from 3.8882/8934 yesterday.

Vis-a-vis the pound, the local currency declined to 5.5156/5236 from 5.4616/4687 at yesterday’s close and weakened against the euro at 4.9313/9378 from 4.9236/9309 previously. - Bernama

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