The ringgit opened higher today against the US dollar on better demand due to investors’ improved risk appetite ahead of the announcement of the government's economic stimulus package later today.
At 9am, the local note appreciated 100 basis points to 4.2130/2200 against the greenback from 4.2230/2280 yesterday.
The initiative aimed to stimulate Malaysia’s economy and mitigate any adverse repercussions arising from the Covid-19 outbreak and other external uncertainties.
It will be announced by the interim Prime Minister Dr Mahathir Mohamad.
“This (stimulus package) announcement would help restore investors’ confidence in the market, which has been under pressure recently due to uncertainties in the local political landscape as well as the Covid-19 outbreak,” he said in a tweet yesterday.
Malaysia is not the only nation planning for a stimulus package to address the Covid-19 crisis.
It was reported that Singapore was the first country in the region to introduce a Covid-19 stimulus package, which it announced last week in conjunction with the tabling of the republic’s budget, followed by Indonesia and most recently Hong Kong.
Thailand is also proposing a new economic stimulus package to the cabinet in mid-March, hoping to immediately resuscitate the kingdom’s economy, especially its vital tourism sector which was badly hit by the outbreak.
Meanwhile, AxiCorp chief market strategist Stephen Innes said foreign investors have resumed their demand for Malaysia's bonds as Bank Negara Malaysia is expected to cut its interest rate moving forward.
“It’s a small but positive move in these politically charged times, which continues to have weighed on the ringgit despite the succession issue looking a bit less messy than at the start of the week,” said Innes.
Meanwhile, the ringgit also traded higher against other major currencies.
It appreciated against the Singapore dollar to 3.0149/0210 from 3.0205/0245 on Wednesday, increased versus the Japanese yen to 3.8185/8259 from 3.8280/8335.
The ringgit strengthened against the British pound to 5.4407/4514 from 5.4679/4761 and rose vis-a-vis the euro to 4.5909/6002 from 4.5980/5047 yesterday.