Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the market observers are anticipating a 50 basis points (bps) cut in the Fed Fund Rate (FFR) tonight.
“This effectively will narrow the gap between the FFR and the Overnight Policy Rate (OPR) which currently stands at 2.50% (5.5% minus 3%).
he told Bernama.This would make ringgit-denominated assets look attractive from the foreign investors’ point of view,
Afzanizam also said the prevailing ringgit-US dollar rate is nearing the immediate support level of 4.2128.
he said.Hence, tonight’s Fed announcement is extremely critical to determine the ringgit’s prospects going forward,
On a related development, he said the Bank of Indonesia (BI) has unexpectedly cut its benchmark interest rate by 25 bps to 6%.
The strong Indonesian rupiah against the greenback along with the slower inflation rate has allowed the BI to lower its interest rate, and it seems that it is prepared to do it again in order to support Indonesia’s economic growth.
Afzanizam added.On that note, its different paths for BI and Bank Negara Malaysia (BNM),
At 6pm, the local currency rose to 4.2410/4.2460 versus the greenback from yesterday’s close of 4.2535/4.2645.
Meanwhile, the ringgit also traded higher against a basket of major currencies.
It strengthened against the British pound to 5.6091/5.6158 from yesterday’s close of 5.6240/5.6385, surged vis-a-vis the Japanese yen to 2.9940/2.9977 from 3.0244/3.0324 and appreciated versus the euro to 4.7236/4.7292 from 4.7375/4.7498 previously.
At the same time, the local currency traded firmer against Asean currencies.
It rose against the Singapore dollar to 3.2792/3.2833 from 3.2891/3.2979 at yesterday’s close and gained against the Thai baht to 12.7472/12.7680 from 12.7725/12.8105 yesterday.
It ticked up against the Philippine peso to 7.61/7.62 from 7.64/7.66 and traded upwards versus the Indonesian rupiah to 276.5/277 from 277.3/278.2 yesterday. - FMT
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