Ringgit lower ahead of US-China trade deal

15 Jan 2020 / 19:11 H.

KUALA LUMPUR: The ringgit ended lower against the US dollar today as investors shifted to cautious mode ahead of the signing of the China-United States trade pact later in the day.

At 6pm, the ringgit was slightly down at 4.0740/7770 against the greenback compared to 4.0730/0760 at Tuesday’s close.

AxiTrader chief Asia market strategist Stephen Innes said there were mixed headlines on the US-China trade, with news of the US drafting rules to block more sales to Huawei and China vowing to punish firms that infringed on trade secrets.

Markets also turned cautious after Treasury Secretary Steven Mnuchin said the US would keep in place tariffs on Chinese goods until the completion of a Phase 2 trade deal.

Innes said the the ringgit would continue to track the underlying movement of the yuan.

“But inflows have dried up a bit on the cusp of the phase one deal as there remains a lot of uncertainty about the road map for step two in the trade deal process.

“On a positive note, China is expected to toe the line on any weakness in the renminbi as we move forward to negotiating Phase Two, which should provide a floor on any ringgit weakness,“ he added.

OCBC Bank today said it expected the ringgit to improve to RM4.04 against the US dollar by end-2020, supported by foreign holdings in the Malaysian Government Securities, currently at 41.6% - the highest level since mid-2018.

Overall, the ringgit was traded lower against other major currencies.

It went down against the Singapore dollar to 3.0232/0256 from 3.0224/0251 at Tuesday’s close, and depreciated against the Japanese yen to 3.7073/7111 from 3.7021/7051 yesterday.

The local currency also weakened against the British pound to 5.2921/2968 compared with 5.2831/2886 on Tuesday, and decreased against the euro to 4.5335/5373 versus 4.5332/5382 previously. - Bernama

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