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The local unit has strengthened to RM3.42 per U.S. dollar, its strongest in almost 10 years, on continued brisk demand by foreign funds in line with the rally in the local stock market.
Year-to-date, it has climbed more than two percent, making it the second-best performing currency after the Thai baht.
The gain was driven by various factors including Bank Negara Malaysia's (BNM) upbeat assessment of the economic outlook, further relaxation of the foreign exchange policy, the Prime Minister's endorsement of the ringgit's strength and speculation that BNM will allow the ringgit to be traded offshore this year.
"There were a lot of positive factors which had contributed to the ringgit's rise and we believe that the upward trend will continue," one analyst said.
The analyst said foreign funds are also expected to increase their ringgit position in view of the country's strong economic fundamentals.
The Malaysian Institute of Economic Research (MIER) had said this week that the ringgit will continue to strengthen and is likely to reach RM3.35 to the U.S. dollar if offshore trading on the local unit is allowed.
Meanwhile, CIMB Investment Bank Bhd has forecast that the ringgit will reach RM3.40 by year-end and RM3.30 by the end of 2008 as BNM tolerates its appreciation.
During the week, the local currency was traded higher against the greenback on the back of follow-through ringgit buying by foreign funds.
It started the week on a steady note, trading at RM3.44, and maintained its gains until Friday to close the week at RM3.42.
On a week-to-week basis, the ringgit was firmer against the greenback at 3.4200/4220 from 3.4410/4430.
The local unit was also mostly higher against other major currencies.
It advanced against the Singapore dollar at 2.2631/2661 from 2.2683/2704 and perked against the yen at 2.8817/8841 from 2.9065/9089.
However, against the British pound, the local unit depreciated to 6.8438/8488 from 6.8321/8371. Against the euro it went up to 4.6519/6549 from 4.6533/6570.
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