Ringgit eases against greenback after Fed keeps rates unchanged

 Fed’s perceived hawkish stance in holding interest rates steady has given the US dollar fresh momentum, says analyst.

KUALA LUMPUR:

 The ringgit eased against the US dollar at Thursday’s close after the US Federal Reserve (Fed) kept interest rates unchanged, lending support to the greenback.

SPI Asset Management managing partner Stephen Innes said the Fed’s perceived hawkish stance in holding interest rates steady has given the US dollar fresh momentum.

“For now, the market sentiment is being dominated by higher US yields and a firmer greenback, not by Malaysia’s oil-linked equity cushion,” he told Bernama.

The Fed announced its decision to keep interest rates unchanged, following a two-day monetary policy meeting.

It decided to maintain the target range for the federal funds rate at 3.5% to 3.75% after leaving rates unchanged at its January meeting.

Innes also said weaker regional risk sentiment is keeping Asian currencies in a defensive position.

“While Bursa Malaysia has held up relatively well as a commodity hedge, that support is not feeding through to the local note,” he said.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said emerging market currencies, including the ringgit, remain softer.

“The conflict in Iran now involves attacks on oil and gas production facilities.

“The main issue now is still about disruption to oil supply and how this can feed into inflation,” he said.

At the time of writing, Brent crude oil prices rose by 6.60% to US$114.47 per barrel.

The market in Malaysia will be closed on March 20 (Friday) and March 23 (Monday) for Hari Raya Aidilfitri.

At 6pm, the local currency fell to 3.9330/3.9415 versus the greenback from Wednesday’s close of 3.9145/3.9205.

The ringgit was mostly firmer against a basket of other major currencies.

It edged up against the British pound to 5.2246/5.2359 from 5.2290/5.2370 at Wednesday’s close, higher vis-à-vis the euro at 4.5139/4.5237 from 4.5166/4.5235 yesterday, but it inched down versus the Japanese yen to 2.4716/2.4771 from 2.4627/2.4668.

Meanwhile, the local currency traded mixed against Asean currencies.

It strengthened versus the Thai baht to 11.9872/12.0204 from 12.0878/12.1130 at Wednesday’s close and appreciated against the Philippine peso to 6.54/6.56 from 6.57/6.59 yesterday.

However, the ringgit was slightly softer against the Singapore dollar at 3.0671/3.0740 compared to 3.0668/3.0718 yesterday, and it was lower vis-à-vis the Indonesian rupiah at 231.4/232.0 from 231.0/231.6 at the previous close. - FMT