Ringgit reaches highest level in nearly 11 months

KUALA LUMPUR: The ringgit continued its upward trend and closed at its highest level in nearly 11 months at RM4.58 against the US dollar today.

According to Bernama, analysts stated that this performance was driven by the Bank of Japan’s (BOJ) decision to raise interest rates and the potential decrease in the Federal Funds Rate by the US Federal Reserve (Fed) that might be implemented in September.

As of 6 p.m., the ringgit surged by 315 basis points to 4.5885/5925 against the US dollar, compared to 4.6200/6235 at the close yesterday.

Mohd Sedek Jantan, Head of Investment Research at UOB Kay Hian Wealth Advisors, said that the BOJ’s action signals confidence in Japan’s economic recovery and could boost investor confidence in Asian currencies if positive sentiment spreads to global markets.

“This will lead to a sustained strengthening of the ringgit.

“The higher closing performance across most Asian markets today is evidence that investors are beginning to focus on rapidly developing markets in Asia,” he told Bernama.

Mohd Sedek added that attractive interest rates in Japan might encourage investors to seek higher returns in other markets, including rapidly developing countries like Malaysia.

“When investors diversify their portfolios, capital inflows into Malaysian assets can further strengthen the ringgit,” he said.