What does the rise in crude oil prices imply for the ringgit?

Question

Accepted Answer

Higher crude oil prices would normally be supportive of the ringgit, but that effect is not guaranteed here.

WTI rose to US$77.69 a barrel and Brent to US$81.60, while the ringgit still opened weaker against the US dollar at 4.1350/1445 from 4.1340/1395. In general, higher crude prices can be positive for a commodity-linked currency like the ringgit because they may lift energy export earnings and improve external receipts, but that effect can be outweighed by broader market forces.
The oil move points to firmer energy prices
WTI was up 2.43 per cent from the previous close, while Brent gained 1.28 per cent. Those levels matter because Malaysia is linked to global energy prices through its oil and gas sector, so a stronger crude market can usually improve sentiment toward the currency.
The ringgit did not move in the same direction against the dollar
Despite the rise in crude, the ringgit slipped against the greenback in early trade. That shows the currency was being driven by more than oil prices alone, with traders staying cautious in a session shaped by West Asia tensions and US-Iran negotiations.
US inflation and Fed expectations were also in focus
Market participants were watching the US Federal Reserve’s personal consumption expenditures inflation gauge due on Thursday. When US inflation data and Fed expectations dominate trading, they can have a stronger immediate effect on the ringgit than crude prices do.
The net oil effect can be offset by risk sentiment
Crude prices often help commodity exporters, but they can also reflect geopolitical risk and tighter supply concerns. In this case, news that oil continued to flow through the Strait of Hormuz suggested some easing in supply fears, while the ringgit was still expected to trade sideways amid weak market sentiment.

Reading history

Hide →

This history is cleared when the page is closed.

What does the rise in crude oil prices imply for the ringgit?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

2

0

0

Share with friends