Friday 29 Mar 2024
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KUALA LUMPUR (Nov 23): The ringgit depreciated to its weakest level at 4.4450 against the U.S. dollar today, as uncertainty remains elevated over the direction of U.S. policy making under President-elect Donald Trump. 

Such sentiment has led U.S. Federal Reserve Chair Janet Yellen to say the U.S. interest rates might rise "relatively soon". Yellen said this at a time when investors were expecting higher U.S. inflation and interest rates in anticipation of Trump's expansionary fiscal polices.

Today, the ringgit-U.S. dollar exchange rate was between 4.4160 and 4.4450. Yesterday, the exchange rate settled at 4.4210.

In a note, CIMB Investment Bank Bhd economist Michelle Chia said the ringgit had depreciated 4.7% against the U.S. dollar, since the U.S. election on Nov 8 this year. 

"Yet, the ringgit has not weakened in isolation as emerging market currencies have also tumbled against the U.S. dollar by 2-10%.

At current levels, the ringgit is undervalued relative to its fair value of RM4.10 per US$. 

"Although financial markets are expected to remain volatile in the near term, if the impact of Trump’s presidency on U.S. fiscal and monetary policy turns out to be benign, the tide of capital flows may return, allowing the ringgit to eventually gravitate towards its fair value," Chia said. 

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