Ringgit may strengthen to 3.55

THE ringgit may see a slight increase next week on anticipation that Malaysian interest rates will remain steady, dealers said.

Bank Negara Malaysia (BNM) governor Tan Sri Dr Zeti Akhtar Aziz was quoted in an earlier report saying that it was not constructive to have “too low interest rates” and the issue at han, was to provide more access to financing.

Dealers said the ringgit may strengthen against the US dollar to 3.55 next week.

“However, trading for the local currency may remain relatively volatile amid concerns that the US bank bailout plan might not help end the global financial crisis,” one dealer said.

During the week, a financial rescue plan was unveiled in the US which was widely criticised as lacking details especially in handling with toxic assets of banks.

However, according to economists’ reports that the US government may bail out mortgage payments of troubled homeowners provided a glimmer of hope.

“The US dollar and yen which were considered as safe-haven during times of economic difficulties will continue to see strong interest,” another dealer said.

During the week, the ringgit was mostly lower against the US dollar and yen, weighed by poor economic data such as the Industrial Production Index and December exports.

It was reported that Malaysia’s December 2008 exports, valued at RM46.09 billion, was the weakest recorded for the year, registering a 14.9 per cent decline year-on-year.

This was attributed to the contagion effect of the financial crisis from the United States, Europe and Asia.

Malaysia’s Industrial Production Index (IPI) for December 2008 declined sharply by 15.6 per cent compared with the same month in 2007.

At the end of the week, the ringgit closed higher against the US dollar on continued buying interest in the local currency.

Dealers said that there could also be some intervention from the authorities to boost the strength of the local currency.

The ringgit was lower against the US dollar at 3.6000/6050 on Friday as compared to last Friday’s rate of 3.5950/6000.

As against the Singapore dollar, the ringgit was higher at 2.3887/3939 from 2.3909/3966 last Friday and lower against the yen at 3.9409/9472 from 3.9328/9409 previously.

The ringgit strengthened against the British pound to 5.2114/2208 from 5.2990/3078 last Friday while against the euro, the ringgit was weaker at 4.6426/6508 from 4.6005/6073. — Bernama