KUALA LUMPUR: The ringgit has the potential to appreciate to 3.9 against the US dollar this year, given the weaker greenback and steady global oil prices, says an
analyst.
MRR Consulting Sdn Bhd managing partner and investment advisor Ooi Kok Hwa said market players were generally not expecting the United States Federal Reserve to increase interest rates this year, causing the US dollar to weaken and providing a lift for the
local note.
“Furthermore, the trend right now is that the renminbi is gaining momentum and will probably continue to appreciate, thus benefiting the ringgit, given the two currencies’ positive correlation,” he told Bernama Saturday after giving a talk at the “Market Outlook Symposium 2019: Smart Investing or Dare Betting?” here.
The half-day symposium was organised by Kenanga Investment Bank Bhd.
Ooi said the uptrend in global oil price was also expected to provide a boost for the local note.
“Oil price is currently on the path of recovery and should maintain within the range of US$50-US$60 per barrel, with oil producers reaching a pact to reduce production,”
he said.
On the downside, he said the firmer ringgit would pose a problem for Malaysian exporters as their US dollar-denominated revenue would be lower in ringgit
terms.
“Additionally, glove manufacturers are negatively affected as their locally produced goods are more expensive in the world market,”
Ooi said.
On Jan 9, shares of glove manufacturers such as Top Glove Corporation Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd and Supermax Corp Bhd declined significantly due to the firmer ringgit and higher crude
oil prices.
“To manage the situation, these companies need to hedge their foreign currency exposure,” Ooi added. -Bernama
