KUALA LUMPUR, March 6 (Bernama) -- The ringgit's new high today at 3.1650 against the US dollar means it is at its strongest since October 1997, when the Asian financial crisis caused a drastic drop in its value.

The reasons given today for its extended three-day rally are the strong export data for January and growing prospects of more interest rates cuts in the US following indications of a slowdown in the US economy.

Economists are expecting more ringgit advances next week as US funds move into countries such as Malaysia which have kept their interest rates steady yet competitive.

Malaysia has maintained its benchmark interest rate, the overnight policy rate, at 3.5 percent.

The strong global demand for commodities will continue to be another major catalyst for the ringgit's strength, going forward.
But many analysts believe the ringgit's growing strength is in fact reflective of the muscle that the Malaysian economy is gaining, especially in terms of increasingly vibrant domestic economic activities that have the potential to shrug off much of the fallout from any US economic slowdown or even recession.

This is buttressed by the fact even though the US remains a major trading partner, Malaysia's overall exports have barely flagged - growing in fact at 10.4 percent in January - and its trade surplus expanded 4.1 percent that month for the 123rd consecutive month of trade surplus since November 1997.

A currency trader is expecting the ringgit to move much high against the US dollar in the near term, especially as other Asian currencies have also risen strongly against the greenback.

The Singapore dollar and ringgit were the best performing Asian currencies today. Other regional currencies such as the Philippines peso and Taiwan dollar also gained significantly today.

source: bernama