PETALING JAYA - The ringgit has strengthened, as a fresh wave of foreign money flowing into the local bourse lifted the currency's exchange rate to as high as RM3.98 to US$1.
This is the first time since August last year that the ringgit has traded below the pyschologically important four level.
Singapore newspaper Today also reported that the ringgit strengthened to 2.9460 against the Singapore dollar on Tuesday (Mar 22), the highest since Feb 1.
The FTSE Bursa Malaysia KL Composite Index climbed 6.39 points to 1,724.75 points - its highest in more than seven months.
Alliance Bank chief economist Manokaran Mottain said while it was a "good sign" that the ringgit had briefly strengthened to below four, he expected it to continue to exhibit volatility for a while, in tandem with the volatility in crude oil prices.
"At the moment, temporary relief is being provided for it largely due to crude, which is trading higher at above US$40 (S$54.54) per barrel, but we don't think it (oil) has reached a steady level yet, " Manokaran said.
Notably, although the benchmark Brent crude has risen more than 50 per cent from 12-year lows recorded in January, lingering concerns on China's economic slowdown and the glut in global oil supply continue to stoke concerns across markets.
The ringgit was last traded at 4.0097 against the US dollar yesterday, up 1.2 per cent from 4.058 on Monday.
After last year' dismal performance, the ringgit is so far the best-performing currency in the South-East Asian region this year, gaining more than 7 per cent, supported by an improved inflow of overseas funds into the local bond and stock markets.
However, given that it had lost some 23 per cent in value against the greenback last year even as falling crude oil prices piled pressure on Malaysia, an oil exporter, the ringgit remains about 16 per cent lower from what it was at the end of 2014, suggesting that it still has plenty of catching up to do.
Independent forex strategist Suresh Ramanathan had told StarBiz on Monday that there would be an occasional spike in the ringgit for the next few months because there were still "noises" in the market, including the impending appointment of a new Bank Negara governor as well as upcoming gross domestic product and inflation figures.
Meanwhile, Templeton Emerging Markets Group executive chairman Mark Mobius recently pointed out that the ringgit was "undervalued", given that the country's economic growth had been "good" and that public debt level was "manageable".
The fund manager, who invests in emerging markets, said he had been buying local stocks, adding that Malaysia was one of his favourite emerging markets, apart from Brazil and Vietnam.
Up to March 18, cumulative net foreign purchases of local equities amounted to RM3.63 billion, close to being the highest amount seen in three years, according to information from MIDF Research.