The ringgit hit a new 13-year high of 2.99 against the US dollar for the first time today, on strong overseas buying interest, a currency trader said.
At 11.40am, the ringgit was traded at 2.9945/9975 against the US dollar, its highest level since October 1997.
"There was a strong demand for the local currency from overseas banks as the ringgit is still undervalued and also on investors optimism over the stock market driven by the Economic Transformation Programme," the trader told Bernama.
He also said the ringgit is still undervalued when all Asean currencies had recovered from the 1997 currency crisis, with some, even above the pre-crisis level.
"The trend for a stronger ringgit has been there for the past two weeks and it will invite more local and foreign investors into the local market," he added.
The trader expects the ringgit to appreciate further to between the 2.80 to 2.85 level by year-end against the US dollar, depending on Bank Negara Malaysia's monetary policy.
Another reason for a stronger ringgit is the appreciating trend, in line with Asian currencies, on speculation central banks in the region will raise interest rates to cool inflation.
Higher interest rates also mean a good yield on local assets.
"The ringgit is also riding on the back of the weakening US dollar as funds are transferred to emerging markets, amid policymakers in Japan and the US keeping their benchmark rates near zero this week," the trader said.
He said there were further signs of the falling US dollar which will continue to support the ringgit, adding that a strong currency would help contain inflation.
