Ringgit lower against US dollar on yuan's weakness

KUALA LUMPUR: The ringgit ended lower against the US dollar on Tuesday following the weakening in the Chinese yuan after ratings agency Moody's cut its outlook on China's government credit ratings to negative.

At 6 pm, the ringgit decreased to 4.6610/6660 against the greenback from Monday’s close of 4.6550/6600.

Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid said the downgrade from stable to negative suggests that the odds of possible sovereign rating cut for China has escalated.

"This happened as the China government is ramping up its fiscal stimulus measures to bolster its economic actitivities as it needs to grapple with the weakening property markets.

"I think given that there is a positive correlation between the yuan and the ringgit, the weakneses in the yuan could result in a weaker ringgit,” he told Bernama.

On the contrary, he said the Japanese yen appears to be getting some support, gaining some 0.33 per cent against the US dollar as investors appear to be seeking refuge in yen.

"Similarly, the euro appreciated against the US dollar by 0.21 per cent,” he added.

At the close, the ringgit was traded higher versus a basket of major currencies.

It appreciated further vis-a-vis the euro to 5.0483/0537 from 5.0623/0677 at Monday’s close, was also higher against the British pound at 5.8873/8936 from 5.8997/9061 previously, and was up against the Japanese yen to 3.1692/1729 from 3.1751/1787 previously.

Meanwhile, the local note traded mostly higher against other Asean currencies.

It was marginally higher versus the Singapore dollar at 3.4820/4860 from 3.4882/4925 on Monday, firmed against the Thai baht to 13.2040/2241 from 13.3183/3368 previously, and improved against the Indonesian rupiah at 300.5/301.0 from 300.9/301.5 previously.

However, the local note fell versus the Philippine peso to 8.42/8.44 from 8.41/8.42 previously. - Bernama

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