Could a surge in risk aversion push the ringgit above 4.35?

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A Surge in Risk Aversion Could Push the Ringgit Above 4.35

A sudden increase in risk aversion in global markets could indeed cause the ringgit to weaken and move back above the 4.35 level against the US dollar. This scenario is contingent on market sentiment shifting away from risk-on towards risk-off, which would impact currency valuations.
Factors Influencing Ringgit Movement

The ringgit's performance is closely tied to global economic sentiment and the strength of the US dollar. FXTM market analyst Han Tan indicated that if global markets experience a significant increase in risk aversion, it could lead to a depreciation of the ringgit. This would see the USD/MYR pair move from its current trading levels back above the 4.35 mark.
Potential for Ringgit Appreciation

Conversely, if the US dollar were to moderate further or if a general "risk-on" sentiment were to strengthen across global markets, the ringgit is expected to test the 4.25 level against the US dollar. This suggests a potential for appreciation, driven by factors that reduce the demand for safe-haven assets like the US dollar.
Impact of Economic Data and Policy Measures

Market sentiment in the coming week will also be influenced by key economic data releases from major economies. For instance, a sharp decline in US retail sales for March and a contraction in China's first-quarter economic growth could heighten risk aversion. Investors will be scrutinising these figures to gauge the extent of economic turmoil against the backdrop of policy support measures being implemented globally.
Oil Market Developments

Developments in the oil market also play a role. An impasse in oil production cuts among OPEC and its allies, particularly following Mexico's rejection of proposed curbs, could lead to price volatility. While not directly stated as a cause for ringgit movement above 4.35, oil prices can influence broader market sentiment and commodity-linked currencies.

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Could a surge in risk aversion push the ringgit above 4.35?

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