Ringgit could weaken further, focus on dollar

KUALA LUMPUR: The ringgit could weaken further on the strength of the US dollar, which is expected to continue its momentum until Donald Trump is inaugurated in January 2017.
ForexTime vice-president of corporate development and market research Jameel Ahmad said the US dollar is going to direct how the ringgit is going to play and how global currencies trade in the coming months.
“At the moment the market is long dollar and this could last a couple more months. Could the ringgit go lower? Yes, but to what levels is difficult to suggest. The milestone low for the ringgit was around 4.55-4.60 so if we cross those levels, there can be more concern, but until then, I won’t focus on 4.80 or 5, that is speculation,” he told a media briefing here yesterday.
Jameel said if the ringgit does weaken to these levels, so would other global currencies, and the ringgit would still be consistent against the basket of currencies.
“Don’t be intimidated by the recent ringgit movements. This is a global trend. Malaysia is not alone.”
Jameel said in the mid to longer term, however, slower global growth continues to pressure the price of oil, and slowing global trade, higher import prices and higher inflation does mean the Malaysian economy will continue to sit lower in terms of growth.
“I would not be heavily concerned if it (GDP) drops below 4%. What is important is domestic spending continues and the local economy must remain supportive,” he added.
Jameel said while headline growth is slowing, the Malaysian economy is still performing at robust levels. Growth rates in Malaysia are still seen as significantly stronger than those in the developed world and could reach above 4% if the domestic economy performs.
“The emerging markets have to accept the new normal, that growth, at least on headline is indeed slowing. There are going to be challenges from a stronger US dollar and other risks such as slowing trade, but the emerging markets are still recording stronger growth rates than the developed world.”  
The US dollar has moved to levels not seen in over 12 years and the dollar index, which tracks the dollar against a basket of currencies, is trading above 100, which was previously seen as a psychological top for US dollar.