KUALA LUMPUR: The ringgit depreciated to an almost a month's low of 4.707 against the US dollar today on a dip in oil prices due to sticky US inflation, and that an interest rate cut in the US is not likely to happen in the first quarter of 2024.
Oil price fell about three per cent to an almost six month low on Tuesday, Dec 12.
SPI Asset Management managing director Stephen Innes said the drop in the ringgit's value was due to two primary factors, mainly the drop in oil prices and the outcome of the US' Federal Open Market Committee meeting.
"Today's drop has more to do with two primary factors.One of them is the precipitous fall in oil prices as the sticky high US inflation data released overnight, and two, suggests that the US Federal Reserve rate cuts will not be on the table during the first quarter of 2024. These are big negative drivers," he added.
The significant drop in ringgit comes just a day after Prime Minister Datuk Seri Anwar Ibrahim announced a cabinet reshuffle, with the appointment of a Finance Minister II as one of its main highlights.
According to Innes, foreign investors would view a cabinet reshuffle on the backdrop of political instability risk.
"There is always a bit of political instability risk when foreign investors view cabinet reshuffle."
"Local investors are better in tune with Malaysia politics, but outsiders not so much," he told Business Times.