KUALA LUMPUR, Jan 4 — The ringgit is expected to be traded under pressure following rising geopolitical uncertainties in the Middle East.

An analyst said the ringgit has shown a strong upward momentum for the start of 2020 before slipping, and is expected to continue the reverse mode in line with other emerging market currencies.

"Oil prices are expected to be on an upward momentum in the coming weeks, but the geopolitical sentiment would drag down business confidence. With Iran vowing to retaliate, we expect that the situation would escalate faster than expected.

"Adding to that, the rising problem will cause global trade to decline further. This would hurt the economy further. It is also expected that the relationship between the US and China will be more sour as China is a key partner of Iran and a major buyer of the country’s oil,” she said.

Chinese foreign ministry spokesman Geng Shuang had reportedly urged the relevant sides, especially the United States, to remain calm and exercise restraint to avoid further escalation of tensions.

According to data by MIDF, Malaysia’s total trade declined for the sixth consecutive month with the latest drop in November 2019 at -4.6 per cent year-on-year (y-o-y) amid slowing global demand and trade spats.

Similarly, both exports and imports continued trending downward, contracting by -5.5 per cent y-o-y and -3.6 per cent y-o-y respectively.

Yesterday, Washington conducted an air strike at Baghdad International Airport, killing the key Iranian military commander, Qasem Soleimani.

Following the strike, a circular from the US State Department urged American citizens in Iraq to leave at once in view of the risk they face following the attack.

At yesterday's closing, benchmark Brent crude rose 3.8 per cent to US$68.79, and is expected to climb further next week.

For the week just-ended, the ringgit ended higher against the US dollar at 4.1005/1035 compared with last Friday’s 4.1260/1290.

Vis-a-vis other major currencies, the ringgit ended higher against the Singapore dollar at 3.0363/0401 compared with 3.0491/0524 last week, improved versus the British pound to 5.3577/3637 from 5.3927/3970 and strengthened against the euro to 4.5675/5717 from 4.5951/6001 last week.

Meanwhile, the local unit depreciated against the Japanese yen to 3.7936/7974 from 3.7680/7718 last Friday.

The market was closed on Wednesday this week for the New Year celebration. — Bernama