Having been one of Asia’s worst performing currencies for some time, the Malaysian ringgit has turned a corner recently; a small corner, but a corner nonetheless.
The ringgit is now clearly trending upwards against the US dollar, albeit on low volatility, and is up nearly 6% since lows in mid-November. One ringgit now buys more than $0.233 and MYR/USD remains close to its seven-month high, posted last week.
Against the Japanese yen, the ringgit is more than 10% higher than in November. One ringgit now buys almost ¥26.
In the face of a resurgent Australian dollar, and despite yesterday having its worst day against the Aussie in three months, the ringgit has gained 5.3% since MYR/AUD’s current cycle low in February and is still buying more than A$0.306.
Malaysia’s currency remains trapped, however, in a clearly bordered range against the British pound.
Although the ringgit is some 4% higher against the pound than it was in November and this week reached a five-month high, MYR/GBP cannot be considered to be on the up until it breaks this obvious horizontal channel – something it failed to do even with the help of some seriously bearish sterling sentiment following the UK general election on June 8th, which to the surprise of many produced a hung parliament and consequently a plethora of UK political uncertainty.
Interested readers can click the chart image below to view the aforementioned MYR/GBP channel in a larger size. The borders are drawn at 0.1763 and 0.1854 but might easily be called 0.1760 and 0.1850. One ringgit currently buys £0.183.
A reversal this week away from the top of this range is perhaps not surprising given that the week’s most important economic data from Malaysia and Britain was as follows:
This range in MYR/GBP is an interesting technical development and will be worth watching closely over the coming weeks. A break of either border is likely to indicate the long-term future direction of this particular exchange rate.
Both the Malaysian and British economic calendars are particularly quiet next week, with the only likely drivers of MYR/GBP being Tuesday’s speech by Bank of England Governor Mark Carney and Wednesday’s Malaysian inflation data, expected to come in at 4% for the year.
Away from scheduled events, business leaders and investors will be clamouring for certainty from the UK political scene and will be watching developments closely, and as an emerging market currency, the ringgit will, as always, be blown around by the changing winds of risk-on/risk-off sentiment.
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