KUALA LUMPUR, Jan. 5 (Xinhua) -- Malaysian Ringgit breaks the 4.00 key level against the U.S. dollar on Friday amid improving oil prices and economic outlook.
The Ringgit rose 0.3 percent to 3.99 against the U.S. dollar on Friday afternoon, the highest level since August 2016.
Last year, Malaysian Ringgit was one of the performers in the region, rising 10 percent to 4.05 against the greenback in a year.
"We still expect Ringgit strength continued in the next few months amid Malaysia's general election, which is likely to be held in coming months," Maybank Forex Research said in a note Friday.
Other positive domestic factors that support the Ringgit outlook include shifts in investor sentiment, strong Malaysian economy outlook, hawkish tilt in Malaysia's Central Bank rhetoric, and widening current account surplus against supporting external environment.
There are also signs of stabilizing commodity prices amid production cut extension by the Organization of the Petroleum Exporting Countries (OPEC) and steady demand for oil, said the report.
"We expect these external and domestics drivers to provide the near term support for Ringgit," it added.
Phillip Mutual's chief strategist officer Phua Lee Kerk told Xinhua earlier that the improving oil prices outlook will continue to outweigh other negative factors in supporting the Ringgit momentum this year.
"It will not be surprising if we see the Ringgit strengthen to 3.80 against the U.S. dollar in the first half," he said.
Foreign exchange firm Oanda's Asia Pacific trading head Stephen Innes also told Xinhua earlier that it has put the Ringgit as its top pick in the region this year, as he believed the Ringgit is under-positioned and has potential to test 3.80 against the U.S. dollar.
The Ringgit momentum will be supported by four drivers -- Malaysian Central Bank's rate normalization, strong economy, a direct beneficiary of the China-proposed Belt and Road Initiative and projected higher oil prices, he said.
Proposed in 2013, the Belt and Road Initiative aims to build trade and infrastructure networks connecting Asia with Europe and Africa on and beyond the ancient Silk Road routes. Malaysia is one of the first countries that supported the initiative.
