Ringgit opens weaker as global central banks raise interest rates

Ringgit opens weaker as global central banks raise interest rates

KUALA LUMPUR,. The ringgit took a dip against the US dollar at the opening today as traders anticipate global central banks’ move on interest rate hikes which appear to be far from over, an economist said.

At 9am, the local note slipped to 4.6035/6100 versus the greenback compared with yesterday’s closing of 4.5950/6000.

Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said that narratives for monetary tightening seem to be making a comeback after the Reserve Bank of Australia and the Bank of Canada (BOC) announced their respective policy rate hikes this week.

“The BOC unexpectedly raised its target overnight rate by 25 basis points (bps) to 4.75 per cent after keeping it steady since its March meeting,” he told Bernama.

Similarly, the Reserve Bank of Australia raised its Cash Rate by 25 bps (bps) to 4.10 per cent yesterday.

The rate hikes showed that global central banks are not done with the interest rate hike cycle as they see the urgent need to bring inflation back to the target level, Mohd Afzanizam said.

“On that note, ringgit could move in a tight range at around RM4.60 against the US dollar as market participants will continue to digest the BOC’s move and how it might affect other central banks’ policy rate decision,” he added.

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

It rose to 3.2899/2947 against the Japanese yen from yesterday’s closing of 3.2996/3034, but slipped vis-a-vis the euro to 4.9299/9368 from yesterday’s 4.9176/9229 and depreciated versus the British pound at 5.7309/7390 from 5.7212/7275 previously.

Similarly, the local note was traded mostly lower against other Asean currencies.

The ringgit declined against the Singapore dollar to 3.4140/4191 from 3.4098/4137 yesterday, fell against the Indonesian rupiah to 309.4/309.9 from 308.8/309.2 yesterday, and eased against the Philippines’ peso at 8.20/8.22 from 8.19/8.20 previously.

However, the local currency improved versus the Thai baht to 13.2117/2357 from 13.2303/2508 previously. — Bernama

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