THE ringgit today rose to its highest level against the US dollar since August 2016, on the back of improving oil prices.

The ringgit advanced about 0.2%, to 3.998, to the dollar in early-morning trade.

It has since settled at RM4.0037 as at 10.15am, according to Bloomberg’s spot exchange rate.

“The latest catalyst must be a confluence of oil prices being very buoyant… paired with a dollar that is unable to hold its footing,” Vishnu Varathan, senior economist at Mizuho Bank, told Reuters.

Malaysia’s economy recorded a higher-than-expected growth of 5.8% last year, thanks to improving domestic demand and labour market, according to the World Bank.

The ringgit fell almost 22% from 2015 to 2016, one of the worst-performing currencies in the region then.

Last year, on December 29, the ringgit gained 9.07% to close at 4.08 against the dollar, making it the second best-performing currency in Asia.

The South Korean won gained 12.8% against the dollar in the same period.

The bullish ringgit is moving in tandem with a strong equity market, with the benchmark FTSE Bursa Malaysia KLCI breaching the 1,800 level yesterday.

The index had closed at 1,803.45, and opened at 1,804.79 this morning.

Meanwhile, Brent crude oil is currently trading above US$68 (RM271) a barrel, its highest level since 2015.

Rising oil prices were due to production-cut deals between the Organisation of the Petroleum Exporting Countries and oil producers like Russia, set to last until the end of this year.

An anticipated interest rate hike is buoying the ringgit, while an underperforming US dollar, which weakened 8.5% last year, has helped raise the exchange rate in the ringgit’s favour.

Also improving liquidity is Bank Negara Malaysia’s requirement, announced early last month, for exporters to convert 75% of their proceeds back to the ringgit, from the 1% requirement prior. – January 5, 2018.