KUALA LUMPUR (Nov 6): As at end-September, the ringgit recorded a depreciation of 1.6% against the US dollar, said the Ministry of Finance (MoF) in its Economic Outlook 2021 report.

The MoF said going forward, the expected recovery in the global and domestic economy will provide some support for the ringgit.  

However, it also said lingering uncertainties over the Covid-19 pandemic, global political and policy environment could lead to periods of heightened exchange rate volatility.

According to the report, the ringgit appreciated against the US dollar in January mainly due to non-resident portfolio inflows.

This was supported by improved investors’ risk sentiment attributed to positive development in the US-China trade negotiation, it said.

However, in February and March, the local note, along with regional currencies, faced significant depreciation against the US dollar.

The downward trend of the ringgit was contributed by geopolitical uncertainties, declining commodity prices and rapid escalation of the Covid-19 pandemic, it said.

From the second quarter onwards, recovery in global investor sentiments amid monetary and fiscal stimulus measures deployed to combat the pandemic led the ringgit to appreciate by 3.5% against the US dollar, in line with the appreciation of regional currencies.

For more stories on the Economic Report 2020/2021, click here.