President Obama has been putting pressure toward Beijing to allow the yuan to begin appreciating against the U.S. dollar within the next month and the currency trade more freely.
Pressure to end the yuan's de-facto peg to the U.S. dollar for the last 20 months will increase in the weeks leading up to the U.S. Treasury Department's currency report, due to be released April 15.
Speculation that Beijing may soon allow the yuan to rise has intensified since last weekend's comments by People's Bank of China Gov. Zhou Xiaochuan, which were interpreted as meaning the yuan's fixed rate against the dollar was a temporary response to the financial crisis and would soon be lifted.
So, what the appreciating yuan have to do with the ringgit. The ringgit have been seen to peg with yuan since the Malaysian economy and the Chinese economy is indirectly related. The current strength of the ringgit could partly due to the above speculation of the yuan. On the chart of USDMYR, the pair has been trending downwards past the last important horizontal support of 3.3272. The pair has been bouncing at 3.300 with technical indicator showing oversold position. A near term market correction is expected for USDMYR.
