Ringgit edges up as softer US yields weigh on greenback

The local note opens slightly firmer at 4.0450/4.0550, with rising oil and gold prices offering support.

KUALA LUMPUR:

 The ringgit edged marginally higher against the US dollar on Thursday, underpinned by easing US Treasury yields that weighed on the greenback as markets priced in a more accommodative Federal Reserve policy stance.

At 8am, the local currency traded slightly firmer at 4.0450/4.0550 against the dollar, compared with Wednesday’s close of 4.0465/4.0525.

IPPFA director of investment strategy and country economist Sedek Jantan said the ringgit’s uptick reflected a softer dollar tone overnight as US Treasury yields edged lower.

He said that the pullback in the greenback from recent highs, particularly against the yen, suggested markets were gradually unwinding defensive dollar positions rather than shifting into a full risk-off mode.

At the same time, firmer oil and gold prices provided a supportive external backdrop for the ringgit, he said. Higher energy prices improve Malaysia’s terms of trade, while rising gold prices signal easing US real yields, which tend to favour emerging market currencies.

“As such, the combination of lower US yields and commodity support suggests the ringgit’s gains are being driven by macro-financial fundamentals rather than speculative flows,” he said.

Sedek expects the ringgit to remain range-bound with a mild upward bias today, with near-term direction guided by movements in US yields and intraday swings in the dollar.

Against a basket of major currencies, the ringgit traded mostly higher at the opening, but weakened versus the Japanese yen to 2.5527/2.5593 from 2.5488/2.5526 at Wednesday’s close.

It strengthened against the euro to 4.7104/4.7220 from 4.7146/4.7216 and edged up against the British pound to 5.4361/5.4495 from 5.4446/5.4526.

The local note also advanced against most Asean peers.

It rose versus the Singapore dollar to 3.1410/3.1493 from 3.1432/3.1481 and strengthened against the Thai baht to 12.8437/12.8841 from 12.8714/12.8958.

The ringgit was slightly firmer against the Indonesian rupiah at 239.8/240.5 from 239.9/240.3 and the Philippine peso at 6.80/6.82 from 6.81/6.82 previously. - FMT