KUALA LUMPUR (Feb 20): The ringgit traded higher against major currencies but was marginally lower against the US dollar at the opening on Tuesday on a cautious tone, ahead of the US Federal Open Market Committee (FOMC) meeting minutes’ publication this week, said an economist.
At 9 am, the ringgit had eased slightly to 4.7870/7930 against the greenback, compared with Monday’s close at 4.7850/7890.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said even though US markets were closed on Monday for a public holiday, it is believed that market sentiments were still reeling from last Friday’s US producer price index (PPI), which came in higher than expected at 0.9% in January against consensus estimates of 0.6%.
A higher PPI signifies higher inflation, which could lead to interest rate increases.
On the local front, Mohd Afzanizam said Tuesday’s data on Malaysia’s exports would be in focus, with consensus estimates expecting overseas shipments to turn around to a 3% growth in January from a 10% contraction in the prior month.
Lower-than-expected gross domestic product growth of 3% year-on-year in the fourth quarter of 2023, which was announced last Friday, indicated that the Malaysian economy is susceptible to the external demand gyration.
“Therefore, a positive export print would bolster hopes of better prospects for the Malaysian economy this year,” Mohd Afzanizam told Bernama.
Meanwhile, Finance Minister II Datuk Seri Amir Hamzah Azizan expects the ringgit to strengthen against the US dollar this year, as the FOMC has signalled the end of US interest rate hikes after raising the benchmark 11 times since March 2022 to the current rate of 5.25%-5.50%.
He said the US Federal Reserve had probably reached the end of the hike period, and is expected to chip off interest rates this year.
“If there are no material geopolitical events, we should see the ringgit strengthen throughout the year,” said the minister in an interview with Bernama on Monday.
Against a basket of major currencies, the ringgit was traded higher at the opening on Tuesday.
It improved vis-a-vis the Japanese yen to 3.1858/1900 from 3.1913/1942 at Monday’s close, increased against the British pound to 6.0254/0329 from 6.0358/0408, and rose slightly versus the euro to 5.1556/1621 from 5.1558/1601 previously.
The ringgit was traded mixed against other Asean currencies.
It strengthened versus the Thai baht to 13.2377/2590 compared with 13.2806/2976 at Monday’s close, ticked up versus the Singapore dollar to 3.5544/5591 compared with 3.5555/5587, but was easier against the Indonesian rupiah at 306.2/306.7 from 306.0/306.5 previously.
The local note was flat against the Philippine peso at 8.53/8.55 from 8.53/8.54 previously.
