Ringgit slips further against US dollar amid geopolitical tension

Ringgit slips further against US dollar amid geopolitical tension

At 6pm, the local currency eased to 4.4550/4565 versus the US dollar from yesterday’s close of 4.4540/4565. — Reuters pic

Wednesday, 03 Aug 2022 6:54 PM MYT

KUALA LUMPUR, Aug 3 — The ringgit continues its slide against the US dollar today as investors opted for the safe haven currency amid concerns over the US-China geopolitical tension.

US House of Representatives Speaker Nancy Pelosi’s trip to Taiwan has drawn ire from China and prompted the latter to mobilise its air force and navy in response to the visit, risking further destabilisation in US-Sino ties, dealers said.

At 6pm, the local currency eased to 4.4550/4565 versus the US dollar from yesterday’s close of 4.4540/4565.

Independent economist Mohd Afzanizam Abdul Rashid said the US dollar has been well supported throughout the day as the uncertainty over the geopolitical situation in Taiwan continues to develop.

Additionally, the European Union’s (EU’s) retail sales contracted 3.7 per cent year-on-year in June versus a 1.7 per cent contraction based on consensus estimates.

“It appears that the US economy continues to fare well relative to its European counterparts, suggesting that the US Federal Reserve (Fed) is on track to raise its policy rate to between 3.25 per cent and 3.5 per cent by end of 2022. Therefore, a combination of risk aversion and prospects for a higher Fed funds rate will give an edge to the US dollar. By extension, the ringgit is likely to stay weak in the near term,” he told Bernama.

SPI Asset Management managing partner Stephen Innes said the US-China tension over Taiwan, combined with hawkish US rates pricing, weighed on the ringgit throughout the day.

However, the ringgit closed higher against a basket of major currencies.

The local currency gained against the euro at 4.5396/5412 from 4.5587/5612 yesterday and advanced versus the British pound to 5.4244/4262 from 5.4406/4436 previously.

It also improved against the Singapore dollar at 3.2262/2277 from yesterday’s close of 3.2278/2301 and appreciated versus the Japanese yen at 3.3459/3472 from 3.4031/4053 yesterday. — Bernama