KUALA LUMPUR – The ringgit continued its upward trend versus the US dollar at the opening as the US dollar index (DXY) recently fell to its weakest point in 2024, prompting buying interest for other currencies, including the ringgit, said analysts.
At 8am, the ringgit appreciated to 4.3615/3830 against the greenback compared with 4.3750/3830 at the close on yesterday.
UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan said the decline in DXY was triggered by the release of the US Federal Reserve’s minutes yesterday, which indicated that a significant number of Fed officials considered a rate cut of 0.25 percentage points at the July 30-31 meeting as a viable option.
“This statement has clarified the central bank’s stance on the potential pace and extent of interest rate reductions.
“Hence, the ringgit is anticipated to commence trading at a higher level today, reflecting the decline in DXY,” he said.
The Fed’s next policy-setting meeting is scheduled for September 17–18.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said that the US Labour Statistics Bureau reported the preliminary benchmark revision to nonfarm payroll of -818,000 between April 2023 and March 2024.
This also supports the view that the US labour market was not as robust as previously reported.
“As such, the ringgit is poised for further appreciation in the near term as the gap between the Fed fund rate and the overnight policy rate is expected to narrow when the Fed starts to cut rates in September,” he said.
The ringgit meanwhile traded lower against a basket of major currencies.
The local currency slipped against the Japanese yen to 3.0050/0201 from 2.9943/3.000 at yesterday’s close, dropped vis-a-vis the euro to 4.8648/8888 from 4.8637/8726, and depreciated against the British pound to 5.7096/7378 from 5.6993/7097 previously.
It, however, traded higher against Asean currencies.
The local note strengthened against the Singapore dollar to 3.3406/3576 from 3.3456/3519 at yesterday’s close and rose versus the Indonesian rupiah to 281.3/282.9 from 282.2/282.9.
It gained vis-a-vis the Thai baht to 12.7120/7825 from 12.7373/7676 yesterday and inched up against the Philippine peso to 7.72/7.76 from 7.74/7.76 previously. – August 22, 2024