adminKUALA LUMPUR: The ringgit opened higher against the United States (US) dollar today, recovering from yesterday’s sharp decline amid market sentiment that remains cautious following the latest policy decision by the US Federal Reserve (Fed).
At 8am, the local currency strengthened to 4.1130/1225 against the US dollar from 4.1145/1195 at yesterday’s close.
Bank Muamalat Malaysia Bhd Chief Economist, Mohd Afzanizam Abdul Rashid said the US Dollar Index remained high at 100.85 points after the Federal Open Market Committee (FOMC) decision, with investors now focusing on the Fed’s interest rate projections.
“The market appears to be paying attention to Fed staff projections which indicate that the US central bank is likely to raise the federal funds rate by 25 basis points by the end of this year.”
“However, risk appetite in the global equity market has improved following reports of a peace agreement between the US and Iran which has the potential to reopen the Strait of Hormuz,” he told Bernama.
Mohd Afzanizam said the development could help ease concerns over oil supply disruptions, thus potentially lowering crude oil prices and reducing inflationary pressures globally.
“Basically, the news signals less pressure on central banks to continue tightening their monetary policies. However, the lack of clear direction guidance in the FOMC statement has led the market to take a more conservative approach.”
“The ringgit fell against the US dollar yesterday by 1.29 percent and the decline was seen as somewhat excessive compared to other regional currencies. The ringgit has the potential to return to stability today after experiencing a sharp decline,” he said.
At the opening of trading, the ringgit traded higher against major currencies.
It strengthened against the Japanese yen to 2.5504/5564 from 2.5588/5620 at yesterday’s close, rose against the euro to 4.7135/7244 from 4.7222/7280 and rose against the British pound to 5.4304/4429 from 5.4476/4542 previously.
Against regional currencies, the ringgit traded higher overall except against the Philippine peso which was almost unchanged at 6.79/6.81 compared to 6.79/6.80 yesterday.
The local currency also strengthened against the Thai baht to 12.5435/5801 from 12.5611/5809, increased against the Indonesian rupiah to 231.1/231.7 from 231.2/231.5 and rose against the Singapore dollar to 3.1874/1950 from 3.1898/1939 previously.
— BERNAMA
