KUALA LUMPUR – Jan 28, 2016: The Bloomberg Business has confirmed in a report yesterday that the sentiment towards ringgit is finally improving, following the absolving of Prime Minister Datuk Seri Najib Razak from a corruption probe and rallied of oil trade.
According to the Bloomberg report, ringgit extended an advance beyond its 100-day moving average, which is a positive indicator that the currency is appreciated this month compared to most of its Asian counterparts.
Additionally, ringgit is strengthened for a fourth day in the longest stretch of gains since September last year, as it rose 0.9 percent to 4.2565 a dollar, here.
The currency has been reported to be appreciated 0.9 percent versus the dollar this month, compared with a 2.7 percent loss in the Indian rupee and the South Korean won’s 2.5 percent decline.
Based on the prices from local banks compiled by Bloomberg, it is also reported that the currency has reached a seven-week high of 4.2347.
The report also confirms that ringgit had increased exceeding any other emerging markets, now that Najib was found innocent of the corruption allegations and that oil traded 15 percent off its lowest in more than a decade.
Head of foreign-exchange and fixed-income strategy Nizam Idris of Macquarie Bank Ltd (Singapore) had reportedly said that the sentiment has been turning around as the “political risk is out of the way”.
The report added, as Najib is presently able to give full attention to the economy hit due to slump in commodities, the investors would be focusing on today’s budget revision for a clearer picture on the nation’s economy outlook.
Nizam added, “oil is also a big factor”, saying that a rally in the benchmark stock index has indicated that the investors believe that the budget “won’t be too negative”.
The slide in Brent to around $31 a barrel had prompted the government to reassess its national budget, which assumes an oil price of $48.
Earlier on Jan 13, the secretary-general of Treasury Mohd Irwan Serigar Abdullah said that the amendments will include measures to shrink operating expenditure and the privatization of some projects, as Najib seeks to trim the fiscal shortfall to 3.1 percent of gross domestic product this year, from an estimated 3.2 percent in 2015.
Senior currency strategist at Australia and New Zealand Banking Group Ltd. (Singapore) Khoon Goh also commented that the deficit goal will likely be adjusted slightly higher.
He added, new growth estimation may also be announced from the current 4 percent to 5 percent.
“The ringgit’s near-term fortunes remain tied to oil price developments, and further strength is dependent on the ability of oil prices to rally.
“Domestically, the focus is on the budget revisions,” he added.