Crude Oil Prices, US Bond Yields Impact Ringgit Trading

Monday’s trading session showed the Malaysian ringgit trading mixed against the world’s major currencies. During the opening bell today, April 12, it opened flat versus the US dollar. The Malaysian ringgit stood at RM4.1330/1380 at 9:01 AM. This foreign exchange rate remained unchanged, with last Friday seeing a closing of RM4.1330/1370.

We are eager to share this important news about Malaysia’s official currency because it could significantly affect our forex traders, especially those from the Southeast Asian region. Plus, Malaysia is an economic power in the Southeastern hemisphere, and its foreign exchange situation can significantly influence the trading activities there.

As for the euro, Malaysia’s local unit went down against the European Union’s official currency, trading from RM4.9141/9205 last week to RM4.9162/9238 earlier today. It also eased versus the British pound from RM5.6618/6685 previously to RM5.6651/6728, based on the news posted online by business and financial news source for Singapore and Malaysia, The Edge Markets.

Meanwhile, the Malaysian ringgit strengthened against the Japanese yen, trading from RM3.7689/7733 previously to RM3.7651/7707. Additionally, Malaysia’s official currency inched up against the Singapore dollar, trading from RM3.0800/0839 last Friday to RM3.0790/0839.

Stephen Innes commented that the Malaysian ringgit stays stuck in a channel, trapped between finicky crude oil prices and higher US bond yields. He added that higher inflation in China caused by firmer commodity costs had influenced Malaysia’s local note. The Axi head global markets strategist said that this situation in China is likely to witness the Chinese central bank taking steps to allay the nation’s credit impulse.

Innes also remarked that this scenario which the Malaysian ringgit is subjected to is potentially adverse for commodity exporters if the transitory inflation impacts from higher oil costs do not ebb. Kenanga Research shares a similar perspective as Innes. On a separate note, the group remarked that the Malaysian ringgit’s upside looks limited this week.

This condition is because the Southeast Asian nation’s currency’s direction would get heavily impacted by the US Treasury yields and the volatile crude oil market. Kenanga Research relayed that a more-robust-than-anticipated US inflation reading could prompt the US bond yields to trade higher, giving support to the greenback. Hence, the Malaysian ringgit will trade range-bound between RM4.13 and RM4.14 before closing this week a little lower versus the US dollar.

Today, the benchmark Brent crude stayed anchored at RM260.73 (US$63) after an unsettling calm witnessed in the oil market lately. Meanwhile, the US 10-year Treasury note surged by 3.2 basis points to 1.664 percent last Friday. We want to inform our readers that the Malaysian ringgit’s performance in today’s trading session appeared a mixed bag.

With this event, we are taking the helpful advice of Mr. Innes. Considering that various external, uncontrollable factors cause this scenario, we want to advise that it is best for Malaysian foreign exchange or forex traders to remain in a wait-and-see position moving forward, similar to their Group of Ten or G10 colleagues ahead of the March 2021 US Consumer Price Index.

We learned that this important information’s release is tomorrow, Tuesday, April 13. Mr. Innes said that it would offer the market the initial read on the US inflation dial if it is anywhere close to the point of concern for risk assets.

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