PETALING JAYA: The ringgit continued its upward trend against the US dollar today, strengthening as much as 0.35% to a high of 4.15, the highest in three months, ahead of Bank Negara Malaysia’s (BNM) Monetary Policy Meeting tomorrow.
As at 5pm today, the ringgit gained 0.26% to 4.1535 against the greenback from 4.1645 last Friday, according to exchange rate data on BNM’s website.
Meanwhile, the US dollar has been trading at lower levels recently, partly due to its protracted trade war with China. Despite optimism that the two countries will finally ink a “phase one” deal, there is still uncertainty on whether the US will cancel planned December tariffs and remove some of the current tariffs in line with China’s demand.
Domestically, the central bank is widely expected to hold the key interest rate at 3%, at least until the first quarter of next year. It is also estimated that BNM will provide some positive leads to further boost the economy.
“We will watch for BNM’s view on how domestic conditions have evolved since the latest meeting, given that the domestic economy’s resilience has been the primary growth driver for the past few quarters,” Standard Chartered said in a research note today.
At the same time, a strengthening in manufacturing data pointed to a potential recovery in the economy.
Last week, IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) reported an improvement in October driven by new orders and output.
In October, the PMI reported an increase to 49.3 from 47.9 recorded in the previous month, which is its highest level for six months and reviving to sit broadly in line with its historical average.
IHS Markit chief business economist Chris Williamson commented that signs of manufacturing turning a corner started to appear in October, hinting that the pace of economic growth could accelerate in the fourth quarter.
Externally, there has been encouraging news emerging from the 22nd Asean Plus Three (APT) Summit in Bangkok.
According to a Reuters report, conclusive talks for what could be the world’s biggest trade pact were held, with a positive outcome expected to be announced.
Southeast Asian countries had hoped to announce at least provisional agreement on the Regional Comprehensive Economic Partnership (RCEP), however, last minute demands from India has pushed back the announcement.
The RCEP is a multilateral trade agreement between the 10 member states of Asean – Malaysia, Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam – and its six Free Trade Agreement (FTA) partners, namely China, Japan, South Korea, Australia, New Zealand and India.
The RCEP, which began in 2012, with a combined GDP of US$49.5 trillion (RM206 trillion), and which makes up 39% of the total global GDP, is set to be the world’s largest trade pact when successfully concluded.
source https://www.thesundaily.my/business/ringgit-gains-momentum-ahead-of-bnm-policy-meeting-CE1574567
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