Ringgit easier against US dollar at opening, strong dollar continues pressure on global currencies

KUALA LUMPUR: The ringgit opened easier against the US dollar today with traders maintaining their focus on the greenback with higher-than-expected US inflation data.

This may suggest that the US Federal Reserve may keep interest rate hikes, dashing the expectation for a June interest rate cut.

At 9 am, the local currency fell to 4.7695/7735 versus the US dollar from Tuesday’s close of 4.7455/7500.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) surpassed the 105 points following the release of the US March inflation report, which registered at 3.5 per cent versus the consensus estimate of 3.4 per cent.

“Some economists have pencilled in a rate cut projection towards the final quarter of the year. It is going to be a dollar positive in the immediate term with ringgit likely to stay weak given that the interest rate differentials between the US and Malaysia is expected to remain wide,” he told Bernama.

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From the perspective of the surge of US Treasury yields, SPI Asset Management managing partner Stephen Innes said the unexpectedly high inflation figures have kept yields elevated, influencing market dynamics.

“This coupled with China’s ongoing deflationary challenges would suggest a somewhat less pessimistic outlook for currencies like the ringgit, particularly amid a modest improvement in global risk sentiment, potentially mirrored in Asian markets today, following cues from US equities,” he said.

Innes added that the persistent weakness of the yen, exemplified by its three-decade low against the Chinese yuan, raised concerns about its impact on regional trade dynamics and hinted at the possibility of broader currency devaluations across the region, reminiscent of historical “beggar thy neighbour” policies.

“Therefore, it’s crucial to closely monitor the movements of the Japanese yen and the Chinese yuan, especially the latter, to gauge whether Chinese policymakers are open to further yuan depreciation, potentially impacting currencies like the ringgit,” he added.

It was reported that the US dollar strengthened against nearly every other major currency to levels not seen in decades and the dollar surged to 153.24 yen, the strongest since 1990, 34 years ago.

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The ringgit was traded better against a basket of major currencies.

It strengthened vis-a-vis the Japanese yen to 3.1175/1203 from Tuesday’s close of 3.1255/1287, rose against the euro to 5.1158/1201 from 5.1565/1614 previously and inched up versus the British pound to 5.9881/9931 from 6.0173/0230.

The ringgit was mixed against Asean currencies.

It improved against the Singapore dollar to 3.5243/5276 from 3.5262/5298 but was lower versus the Thai baht at 13.0500/13.0678 from 12.9434/12.9596 on Monday and fell vis-a-vis the Indonesian rupiah to 300.9/301.3 from 299.3/299.8 and was easier versus the Philippine peso at 8.45/8.46 from 8.41/8.42.