KUALA LUMPUR (Sept 27): The Malaysian ringgit has slid further to 4.6112 against the US dollar on Tuesday (Sept 27), as it registered its fourth consecutive day of decline, tracking losses among major currencies against the greenback.

At 6pm, the local currency depreciated to 4.6112 against the greenback, from Monday’s close of 4.6038.

Meanwhile, the ringgit traded mixed against a basket of other currencies.

It appreciated vis-a-vis the euro to 4.4309, from Monday’s 4.4401.

However, the local note weakened against the Japanese yen to 3.1935 from Monday’s 3.1809, the Singapore dollar to 3.212 from 3.2092 at Monday’s close, and weakened against the British pound to 4.9818 compared to 4.9481 on Monday.

The onslaught by the US dollar on global currencies extended last week after the US Federal Reserve (US Fed) raised its interest rates by 75 basis points (bps) for the third consecutive time to a range of 3% to 3.25% — the highest level since 2008 — to tackle record inflation.

Year-to-date, the Japanese yen has weakened 25.65%, the euro weakened 18.31%, the Chinese renminbi fell 12.78%, pound sterling fell 25.24%, and the Australian dollar depreciated 11.87% — against the US dollar.

Meanwhile, other major currencies were seen rebounding slightly against the US dollar on Tuesday, following the sharp overnight decline that was led by the British pound.

On Monday, the British pound hit its all-time low of US$1.0689, as investors brushed off the Bank of England’s hawkish stance amid massive tax cut proposals by the UK government to trigger economic growth in the current period of high inflation.

Just a week before, the Bank of England (BOE) raised rates to 2.25%, from 1.75%. At home, Bank Negara Malaysia (BNM) has raised the overnight policy rate (OPR) thrice to 2.5% this year, in line with expectations for further normalisation of monetary policy, as the country’s economic growth and inflation gain momentum.

Pertaining to the ringgit, Juwai IQI global chief economist Shan Saeed said that any support to the local currency hinges upon stronger crude oil prices, with Malaysia being a producer of oil and gas.  

From a 14-year high of US$127.98/barrel in March 2022, Brent crude oil reached more than an eight-month low of US$85/barrel-range this week, on recession fears, although outlook is mixed as US inventories rise, while OPEC intervention remains on the cards. The benchmark crude is still up 10% year-to-date. 

“If oil prices go up, the ringgit will get good support, and if the US dollar takes a beating due to equity market shenanigans, then we can expect the ringgit to take a smaller turn between 4.30-4.50 against (US) dollar,” he said when contacted.

However, he foresees the ringgit to further weaken in the 4.50-4.75 range against the US dollar this year.

“As the world is currently at the mercy of the (US) Fed, we are expecting the Fed to raise another 0.75-100 percentage points. As such, any increase there, would also mean further depreciation of [the] ringgit, which has already weakened well over 10% this year,” Shan said.