Ringgit closes lower ahead of US interest rate policy

 

KUALA LUMPUR: 

The ringgit closed easier against the US dollar today, taking a breather from its recent rally.

Market participants continued to take profits while awaiting further developments on the US central bank’s interest rate policy.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said Malaysia’s economy is estimated to expand by 5.8% in the second quarter of 2024 (Q2 2024), up from 4.2% in the previous quarter, which indicated that the country is on track to achieve the 4% to 5% growth target this year.

“Malaysia might exceed the target if the second half year continues to outperform the first six months of this year.

We see this as a sign that the country’s monetary policy will remain on hold although its counterparts in developed markets are about to make a turn as some of them are already prescribing monetary easing,

 he said.

Afzanizam said the large interest rate differential between the overnight policy rate and benchmark interest rates in the developed countries would be reduced.

Ultimately, this would improve the appeal of the ringgit. In that sense, the ringgit should appreciate towards the end of the year,

 he told Bernama.

UOB Kay Hian Wealth Advisors head of investment research Sedek Jantan pointed out that the US Dollar Index (DXY) traded above 104.25 today, however, the regional currencies tumbled amid rising concerns over geopolitical risks and the possibility of policy changes in the US.

Additionally, while the US unemployment claims rose to 243,000, strong manufacturing data bolstered the DXY,

 he added.

At 6pm, the ringgit fell to 4.6840/4.6875 versus the greenback from yesterday’s closing of 4.6680/4.4710, down 160 basis points (bps) today, after having appreciated by 1% against the US dollar since the beginning of this month.

Meanwhile, the local currency strengthened against a basket of major currencies.

The local currency rebounded versus the Japanese yen to 2.9760/2.9786 from 2.9827/2.9849 at yesterday’s close, gained against the British pound to 6.0452/6.0497 from 6.0628/6.0667 and improved vis-a-vis the euro to 5.0957/5.0995 from 5.1021/5.1054 previously.

The ringgit was easier against Asean currencies, except for the Thai Baht.

It weakened against the Singapore dollar to 3.4833/3.4862 from 3.4807/3.4832 at yesterday’s close, inched down versus the Indonesian rupiah to 289.2/289.6 from 288.9/289.2, but appreciated vis-a-vis the Thai baht to 12.9075/12.9221 from 12.9750/12.9887 previously.

However, it slipped against the Philippine peso to 8.03/8.04, from 8.01/8.02 yesterday. - FMT