Malaysian currency, the Ringgit, displays a surge in value against the U.S. dollar, driven by a more accommodating stance from the Federal Reserve.
The Malaysian ringgit showed a mixed performance against major currencies this week, as the US and China announced a framework deal to resolve their dispute over TikTok.
The ringgit opened firmer against the US dollar on Wednesday, trading at 4.1840/2140 per dollar. However, it later weakened, returning to its previous level. Against Asean currencies, the local note was also mixed.
The ringgit improved against the Indonesian rupiah, trading at 254.4/256.4 from 256.3/257.0. It also strengthened against the Thai baht, trading at 13.2092/3114 from 13.2317/2703.
However, the ringgit fell against the Singapore dollar, trading at 3.2800/3041 from 3.2719/2803. It also weakened against the British pound, trading at 5.7133/7542 from 5.6864/7006.
The ringgit also slipped against the euro, trading at 4.9660/5.0016 from 4.9203/9326. It eased against the yen, trading at 2.8591/8798 from 2.8373/8446.
The ringgit's performance was supportive, according to Stephen Innes, managing director of SPI Asset Management. He cited signs of easing trade tensions between Washington and Beijing, resilient global equity markets, and expectations of a more accommodative policy stance by the US Federal Reserve (Fed) as key factors.
Additionally, analyst Stephen Innes highlighted positive news from HSBC and UBS in September 2020, where they announced an increase or plans to increase their trading operations with Malaysia, which further underpinned the ringgit's performance.
It's important to note that the ringgit is a trade-sensitive currency. The combination of softer US yields, resilient risk appetite, and easing geopolitical overhang between the US and China is supportive for the ringgit.
The TikTok deal, which calls for the Chinese-owned app to come under US-controlled ownership, could potentially impact the ringgit's performance in the future. However, at the time of writing, the exact details of the deal are still being negotiated.
Overall, the Malaysian ringgit showed a mixed performance against major currencies this week, with some gains and losses across various currencies. The factors influencing its performance, such as trade tensions, global equity markets, and monetary policy, will continue to be closely watched by analysts and investors.
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