Extension of MCO hits ringgit at opening

KUALA LUMPUR: The ringgit reversed yesterday’s gains to open easier today on renewed concerns over the economic impact of Covid-19, despite the recovery of global crude oil prices.

At 9.01am, the local unit slipped 70 basis points to 4.3620/3720 versus the greenback from 4.3550/3650 at yesterday’s close.

A dealer said the extension of the Movement Control Order (MCO) by another two weeks to May 12 had triggered anxieties among investors, as they worried that it could affect the economic activities in the country.

“Fears of a possible second wave of Covid-19 also hurt risk appetite in the market,” he said.

Prime Minister Muhyiddin Yassin announced late yesterday that the MCO, which is due to end on April 28, has been extended by another two weeks until May 12.

This is the third time the MCO, which was implemented on March 18, has been extended in the government’s efforts to break the Covid-19 chain of infection in Malaysia, and the premier did not rule out the possibility of a further MCO extension after May 12.

However, the fall of the ringgit was capped by the improved crude oil prices with international benchmark Brent Crude advancing 2.48% to US$21.86 per barrel as at 9.36am, while US benchmark West Texas Intermediate (WTI) was 2.79% better at US$16.96 per barrel.

AxiCorp global chief market strategist Stephen Innes said supported by China’s stimulus package and the expected commodity price rebound in the third quarter of 2020, the ringgit could close the week on a more favourable note.

At the opening, the local unit also traded lower against other major currencies.

It depreciated against the Singapore dollar to 3.0578/0659 from 3.0559/0640 at yesterday’s close and weakened against the yen to 4.0494/0598 from 4.0466/0571.

Vis-a-vis the pound, the ringgit weakened to 5.3879/4012 from 5.3784/3921 while against the euro, it slid to 4.6961/7073 from 4.6912/7037.