Cover image via New Straits Times
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The ringgit has strengthened to a near seven-year high against the US dollar today, 26 January
According to Bernama, the rise comes amid improved risk appetite, Bank Negara Malaysia's decision to maintain the overnight policy rate (OPR), and a weaker US dollar index.
At 8am, the ringgit strengthened to 3.9850/9950 against the US dollar from 4.0045/0080 recorded last Friday, with the first figure indicating the buying rate and the second the selling rate.
This is the ringgit's best performance since the pandemic. On 24 May 2018, it traded at RM3.9797 against the greenback.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the strengthening of the local currency to a positive outlook on Malaysia's economy
He said the optimism followed Bank Negara Malaysia's recent Monetary Policy Committee meeting.
"BNM may be inclined to keep the OPR steady, and we see upside potential as the long-term average from 21 July 2005, until today is about RM3.82," he said.
Mohd Afzanizam also attributed it to global economic factors, such as the US dollar-yen trade, as the Bank of Japan (BOJ) and the Federal Reserve Bank of New York are reportedly intervening in the foreign exchange market.
"This happened as Japan is going for a snap election on 8 February, and election pledges are mostly populist in nature, which can cause further strain on Japan's fiscal position.
"It seems that the intervention could see the US dollar be much weaker," he explained.
Last Friday, 23 January, the ringgit hit RM3.99 against the US dollar at midnight before closing at RM4.0062.
