What geopolitical risks are currently influencing the Ringgit?

Question

Accepted Answer

Geopolitical Risks Influencing the Ringgit

The Ringgit is expected to trade around 4.50 against the US dollar in the coming week, influenced by ongoing geopolitical developments. Markets are closely monitoring the situation, particularly concerning the Israel-Hamas ceasefire, which remains a significant point of focus. This, alongside the impending inauguration of Donald Trump on January 20, is contributing to a climate of policy uncertainty that is keeping investors cautious.
Focus on Israel-Hamas Ceasefire

Geopolitical risks, including the developments surrounding a potential Israel-Hamas ceasefire, are a key factor influencing market sentiment and currency movements. While specific details regarding the ceasefire's progress and its direct implications for currency markets are not elaborated upon, its presence in market discussions highlights its role as a point of concern. This uncertainty contributes to the broader risk-off environment that is currently affecting assets.
Anticipation of Trump's Inauguration and Policy Uncertainty

The upcoming inauguration of Donald Trump on January 20 is a major event anticipated by financial markets. Kenanga Investment Bank Bhd has indicated that a potential wave of executive orders following the inauguration could significantly heighten policy uncertainty. This heightened uncertainty is expected to keep risk-on assets, which typically include emerging market currencies like the Ringgit, under pressure.
US Dollar Strength and Ringgit Performance

Throughout the current week, the US dollar has maintained a firm stance, which has largely confined the Ringgit within a narrow trading band between 4.50 and 4.51 against the greenback. This strength in the dollar is partly attributed to economic data releases. For instance, the US Dollar Index saw a brief surge towards 110.0 early in the week, spurred by stronger-than-expected non-farm payrolls data. However, it later eased to 109.0 following a softer-than-anticipated US core Producer Price Index (PPI) reading. On a week-on-week basis, the Ringgit experienced a depreciation against the US dollar, closing at 4.5040/5085 compared to 4.4945/5000 a week prior.

Reading history

Hide →

This history is cleared when the page is closed.

What geopolitical risks are currently influencing the Ringgit?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends