SINGAPORE (Jan 22): The ringgit has put on quite a show in the last two weeks, strengthening to below the psychological level of 4.00 against the greenback. On Jan 12, it was trading at 3.972, its strongest level since mid-July 2016.

As a weak ringgit has made Malaysian exports more competitive in recent years, its strength may be a cause for concern for some exporters. But will the local currency remain strong for long?

There are a myriad of reasons for the ringgit’s recent strength. The obvious one is the weaker sentiment towards the US dollar. The trade-weighted US Dollar Index, which measures the greenback against the currencies of a broad group of major US trading partners, has been on a downward trend. On Jan 12, it touched a year’s low of 91.339 points compared with 102.2 on Feb 3, 2017.

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