Monday, October 3, 2011

Ringgit falls to lowest since July 2010

KUALA LUMPUR: The ringgit fell to its lowest to the US dollar on Monday, Oct 3 as the euro zone debt worries prompted funds to reduce their exposure to currencies in emerging Asia.

At 1.21pm, the ringgit was quoted at 3.2095 to the US dollar, the lowest since July 2010 when it was at 3.2095.

Reuters reported that Asian foreign exchange authorities including central banks of Malaysia and the Philippines, were spotted selling dollars to slow the fall in their currencies.

The news agency said the ringgit and also the baht weakened past 100-week moving averages, indicating further falls.

Reuters said the ringgit weakened past a 100-week moving average of 3.1560 per dollar and it has room to soften more, probably to 3.2400, around the 38.2 percent Fibonacci retracement of its appreciation between March 2009 and August this year.

The baht also broke through the average of 31.26 versus the greenback. It has crossed this technical level for the first time since September 2009.

An economist told the fall in the ringgit was'' more of a risk aversion as investors were trying to cash out of Malaysia on concerns of a further slowdown in the gobal'' economy.

'Hence, the central bank will have little room to increase interest rates. If worsens further, the central bank may have to cut rates,' said an economist with a bank-backed research house.

He said the ringgit could even weaken to 3.30 in the short-term but he believed that fundamentally, the'' ringgit could be supported at the 3.0000 level once investors stopped pulling out.

'Generally, the impact would not be much. Other regional currencies are also moving in tandem against the US. The weaker ringgit will help support exports, even for companies, with forex. Those companies which will benefit are electronics and rubber gloves,' he said.

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