Ringgit opens lower against the US dollar on soft demand

Ringgit opens lower against the US dollar on soft demand

KUALA LUMPUR,. The ringgit continued to open lower versus the US dollar today on subdued demand despite the US Federal Reserve (Fed) leaving its benchmark rate at 5.25 per cent during the Federal Open Market Committee meeting last night.

At 9.02am, the local note was traded at 4.6210/6245 against the greenback compared with 4.6195/6235 at yesterday’s close.

ActivTrades trader Dyogenes Rodrigues Diniz said with the small differential between the US rate and Malaysia’s key interest rate of 3.0 per cent, the US dollar could lose its attractiveness in the short and medium term, opening space for a possible appreciation of the ringgit over the next few months.

He said the Fed’s latest move also marked an important change in its stance, having spent the last 10 meetings gradually raising interest rates.

“This also raises the chance that the Fed might continue to lower interest rates in the upcoming meetings, although that still seems unlikely for the time being.

“From a technical point of view, if the ringgit-US dollar (rate) manages to break below 4.5980, it could drop as low as 4.5250 in a few days,” he told Bernama.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said although the Fed left the benchmark rate at 5.25 per cent, it, however, continued to remain hawkish and leaned towards lowering the inflation rate towards its target level of 2.0 per cent.

This has been reflected in the latest forecast that the Federal Funds Rate would end the year at 5.6 per cent from the previous estimates of 5.1 per cent in March this year.

In that sense, he said, another 25 to 50-basis point hike in the subsequent meetings during the second half of 2023 was quite likely.

“Moving ahead, the focus would be on European Central Bank whereby the consensus is expecting another 25-basis point hike in its policy rate when the Governing Council meets today.

“We expect the ringgit to gain some ground against the US dollar, but against the euro, the ringgit is easing,” Mohd Afzanizam told Bernama.

Meanwhile, the ringgit traded mostly lower against a basket of major currencies.

It advanced against the Japanese yen to 3.2899/2926 from 3.3015/3046 at yesterday’s close but slipped versus the British pound to 5.8497/8542 from 5.8423/8473 yesterday and fell vis-a-vis the euro to 5.0078/0116 from 4.9918/9962.

However, the local note traded mostly higher against other Asean currencies.

The ringgit was slightly lower versus the Indonesian rupiah at 309.9/310.3 compared with 309.8/310.3 at yesterday’s close.

However, the local currency appreciated against the Thai baht to 13.2864/3022 from Wednesday’s 13.3192/3380, rose vis-a-vis the Singapore dollar to 3.4429/4460 from 3.4433/4465 yesterday and improved versus the Philippine peso to 8.25/8.27 from 8.26/8.27 previously. — Bernama

Share This


Wordpress (0)
Disqus (0 )