Ringgit: Turn around?

Since my last update on 13th August 2015, the Ringgit had plunged to its worst level against the US dollar on 29th September 2015 (min = 3.5204 (April 29) avg = 3.8866 max = 4.4618 (September 29)).

However, the ringgit had "rebounded" to its biggest one-day gain in 17 years against the US dollar on 6th October 2015. This was due to economic data that was released by the Bank Negara that helped push the battered currency on an upward trajectory against the greenback and other major currencies.

The ringgit leapt 3.7% against the greenback to RM4.216 from RM4.371 after trade data for August showed that the weak ringgit had helped fatten an increasingly squeezed trade surplus that has been eroded by poor commodity prices.

Exports had climbed for the third straight month to 4.1% in August. The ringgit, which is down 34% against the dollar year-to-date and is the worst performer in the region, got a lift when trade data showed that the weak currency had helped exports.
Exports rose RM2.64bil to RM66.53bil compared with August 2014. This is the highest monthly export value recorded this year. The expansion in exports was to China, the United States, the European Union, Thailand, Singapore, Vietnam, and the Philippines.
The impact of the weak currency was conversely shown in imports which fell by 6.1% to M56.34bil.

The total amount of trade for August was RM122.86bil. The difference between exports and imports helped Malaysia’s trade surplus ballooned to RM10.19bil in August from RM2.37bil in July.

Helping the ringgit was also the rise of crude oil prices, where the price of Brent crude oil rose 1% to US$52.44. 
Another contributory factor was the announcement of the agreement that Malaysia had agreed to the signing of the Trans-Pacific Partnership Agreement (TPPA), though pending final approval from the Malaysian Parliament. The TPPA is a comprehensive free trade agreement involving Malaysia and 11 other economies, which is expected to boost the economy, trade and investment agenda.
It was not just against the US dollar that the ringgit had strengthened. The currency appreciated against the pound sterling and the Singapore dollar. It was at 6.4521 to the pound sterling from 6.6311 the previous day, and at 2.9810 to the Singapore dollar from 3.0208. The ringgit ended stronger against other regional currencies too.
The strengthening of the currency also boosted the FTSE Bursa Malaysia KL Composite Index, with the local bourse closing the day up 26.74 points to 1,689.25 on a volume of 2.69 billion shares.
There is a lot of money parked in foreign currency accounts in Malaysia. StarBizWeek had pointed out, about a week ago, that foreign currency deposits held by business enterprises had reached RM71.47bil as of July 2015 from RM59.9bil in January this year. Will this currency be reinvested back into the Country?

It is hoped that the Ringgit continues to strengthen against the other currencies due to the strong underlying fundamentals. 
/theSTAR 08-10-2015

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