KUALA LUMPUR: Judging by the ringgit's movement pattern in the fourth quarter of the last few years, even though the currency is currently volatile and Malaysians are becoming jittery, it is not going to crash, and will unlikely be traded beyond 4.50 against the US dollar, an economist said today.
IQI Group Holdings Chief Economist/Investment Strategist Shan Saeed said the ringgit will not collapse - instead it will just depreciate, in a manageable way, against the US dollar, as the greenback is getting stronger due to 'Trumponomics.'
"Trumponomics describes the economic policies of Trump. He is an entrepreneur and he knows how to play his cards.
"The US dollar is gaining strength and investors are moving funds into the greenback. It is as simple as 'ABC'. The yield on the US 10-year Treasury note has jumped from 1.37 per cent to 2.36 per cent in just four-and-a-half months," he told Bernama.
Shan said the yield of other fixed-income instruments has also perked and attracted fund movement, while that of the Italian 10-year government bond has more than doubled since Aug 2016.
The LIBOR, one of the world’s most important benchmark rates, has jumped from 0.61 per cent at the start of the year, to 0.91 per cent, its highest level since Nov 2009, he said.
"Sit back and relax. Currency values are determined by market forces.
"I strongly believe the ringgit will soon stabilise and appreciate to the level of 4.20 to 4.30 (against the US dollar) within this month or January next year. What is more, the benchmark for oil prices has started trading above US$53 per barrel," he said.
Shan highlighted that besides the ringgit, all other currencies in the region have taken a beating from the US dollar.
"If you were to look at the chart for Nov, the Indonesian rupiah declined 3.7 per cent, the Philippine peso fell 2.7 per cent, the Singapore dollar is down 2.5 per cent, and the Thai baht lost 1.5 per cent.
"Does the currency chart mean that all these governments are bad, or their policies are wrong? The answer is no!
"It is because the US dollar is gaining strength and investors are moving funds into the US currency due to Trumponomics," he added. -- BERNAMA