KUALA LUMPUR: The ringgit extended its downtrend against the US dollar at the opening today as the country’s political uncertainty drags on amid reports of a unity government in the works and calls for a snap election, analysts said.
The local note was further weakened by renewed concerns about the depth and duration of the Covid-19 impact on global growth.
At 9am, the local note fell to 4.2350/2390 against the greenback from 4.2310/2350 at yesterday’s close.
Despite resigning as the country’s seventh prime minister, Dr Mahathir Mohamad has been appointed by the Yang di-Pertuan Agong Sultan Abdullah Sultan Ahmad Shah as the Interim Prime Minister.
Yesterday, the Yang di-Pertuan Agong held personal interviews with about 90 MPs at Istana Negara. The remaining 132 MPs will meet with the King today amid frantic efforts to bring the nation’s political turmoil to an end.
Meanwhile, the Financial Markets Committee (FMC) yesterday stated that Malaysian financial markets continue to function efficiently with ample liquidity despite recent developments in the country.
It said the foreign exchange (FX) transaction volume remains healthy at US$14.6 billion, supported by two-way flows, while the US dollar against ringgit (US$/MYR) one-month implied volatility remains within the normal range of 4-4.5%.
“The US$/MYR opened higher and traded in an orderly manner throughout the day, in line with broad market expectations and consistent with the performance of regional currencies amid the global outbreak of Covid-19,” FMC said.
“The increased interest led to the US$/MYR interbank FX volume to double from last week’s average.”
In the ringgit fixed income market, it said yield adjustments for the benchmark Malaysian Government Securities have been orderly, with the five-year and 10-year yield levels recovering from their initial upward movements.
The overall secondary bond market recorded a healthy daily trading volume of RM5.9 billion compared to a daily average of RM4.7 billion in 2019.
Financial Market Association of Malaysia president Chu Kok Wei said the orderly manner in which the ringgit FX and bond markets are functioning reflects the maturity of the Malaysian financial markets.
He added that there is sufficient liquidity to fulfil all stakeholders’ needs, as reflected in higher transaction volumes concluded.
Against other major currencies, the ringgit was traded mostly lower.
It marginally rose against the Singapore dollar to 3.0241/0274 from 3.0256/0289 yesterday but declined against the yen to 3.8416/8463 from 3.8324/8371.
The local note slipped against the pound to 5.5051/5120 from 5.4969/5038 and fell vis-a-vis the euro to 4.6026/6086 from 4.5902/5962.