KUALA LUMPUR, July 21 — The ringgit closed lower against the US dollar today, apparently prompted by a deterioration in European Union (EU) risk after Italian Prime Minister Mario Draghi submitted his resignation, said an analyst.
According to a report, Draghi’s resignation on Thursday plunged the EU’s third-largest economy into fresh political turmoil.
At 6pm, the local currency depreciated to 4.4575/4590 versus the greenback from Wednesday’s close of 4.4500/4540.
SPI Asset Management managing partner Stephen Innes said Draghi’s resignation triggered a safe-haven bid for the greenback via political risk premium.
“This uncertainty is bad for European unity and more risky assets like the ringgit suffer.
“Hence, market investors are likely picking up a safe-haven bid (US dollar) in addition to trader positioning for another jumbo 75 basis points rate hike at the Federal Reserve meeting next week,” he told Bernama.
Innes said the ringgit also traded weaker despite positive news that Nord Stream 1 gas flow from Russia will resume.
However, the ringgit traded higher against a basket of major currencies.
The local currency appreciated against the Singapore dollar to 3.1960/1976 compared with 3.1978/2009 on Wednesday and rose versus the British pound to 5.3236/3254 from 5.3498/3546 previously.
It went up versus the Japanese yen to 3.2128/2142 from 3.2202/2233 yesterday and strengthened vis-à-vis the euro to 4.5386/5402 from 4.5586/5627.
— Bernama
