Ringgit opens higher as investors monitor US rate cut pace

 

KUALA LUMPUR: 

The ringgit opened slightly higher against the US dollar as investors shifted their attention to the extent and timing of anticipated US interest rate cuts, confident that monetary easing will persist, said an economist.

At 8am, the local currency rose to 4.2845/4.2950 against the greenback, compared to Tuesday’s close of 4.2850/4.2895.

Bank Muamalat Malaysia Bhd’s chief economist, Afzanizam Rashid, said the US Dollar Index (DXY) remains elevated, with US Federal Reserve officials adopting a cautious stance on the trajectory of rate cuts.

“It appears that a 50 basis points cut scenario may seems unlikely in the next meeting. Perhaps, we cannot totally rule out an intermittent pause in the rate cut decision as the Fed remains wary on the inflation risks.

At the same time, traders and markets are disappointed with the amount of fiscal stimulus announced by the Chinese authorities, leading to doubts as to whether the 5% gross domestic product growth target can be achieved this year,

 Afzanizam said.

He said the Fed’s stance on interest rates and the Chinese authorities’ economic stimulus have elicited a mixed reaction in the market.

It’s a matter of the degree of support. Following this, we sense that risk aversion should stabilise and the sharp correction in Brent crude oil prices from US$80.93 per barrel on Oct 7 to US$77.58 per barrel presently should alleviate concern on risk of higher inflation,

 he said.

Thus, he said, the ringgit should stabilise and possibly stage some rebound after the sharp correction since the start of the month.

At today’s opening, the ringgit traded mostly against major currencies.

It strengthened versus the euro at 4.7027/4.7142 from 4.7079/4.7129 at yesterday’s close, higher against the Japanese yen at 2.8932/2.9005 from 2.8988/2.9022 previously, but edged down vis-a-vis the British pound to 5.6123/5.6260 from 5.6108/5.6167.

The ringgit also performed mixed versus Asean currencies.

It was higher against the Thai baht at 12.7644/12.8048 from 12.7933/12.8129 yesterday and it increased versus the Singapore dollar to 3.2854/2937 from 3.2876/3.2913 at Tuesday’s close.

However, the local note was traded almost flat vis-a-vis the Philippine peso at 7.53/7.55 from yesterday’s close of 7.53/7.54 and it was almost unchanged against the Indonesian rupiah at 273.6/274.4 compared with yesterday’s close of 273.6/274.1. - FMT