Ringgit opens higher amid signs of Middle East de-escalation

 The ongoing Iran war, with its impact on the global economy, is likely to keep market sentiment guarded, says analyst.

KUALA LUMPUR:

 The ringgit opened higher against the US dollar today as global risk sentiment improved after US president Donald Trump signalled a de-escalation in the West Asia conflict.

SPI Asset Management managing partner Stephen Innes said following the move by Trump, crude oil prices dropped nearly 10%, easing financial pressures on oil importers, including Malaysia.

“However, the move still feels more like a release of risk premium than a full shift in conviction,” he added.

“If markets truly believed in a durable de-escalation, we would have seen a much stronger and more sustained rally across risk assets and a deeper greenback selloff.

“Instead, the reaction has been sharp but incomplete, suggesting investors are trimming defensive US dollar positioning rather than fully rotating out of it,” he told Bernama.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the US Dollar Index (DXY) fell by 0.7% to 98.95 following Trump’s extension of the deadline for an attack on Iranian power plants for five days in response to the closure of the Strait of Hormuz.

“It was risk-on mode as a result, with benchmark equity indices such as the S&P 500 and Nasdaq rising more than one per cent amid an 11% decline in the Brent crude oil prices to US$99.94 per barrel.

“As such, the local note is likely to react positively to such news, although the prevailing situation of the war in Iran engulfing the global economy is likely to keep market sentiments guarded,” he added.

At 8.01am, the local currency strengthened to 3.9200/3.9400 against the greenback from Thursday’s close of 3.9330/3.9415.

Markets in Malaysia were closed on March 20 (Friday) and March 23 (Monday) in conjunction with Hari Raya Aidilfitri.

The ringgit was lower against a basket of other major currencies.

It eased versus the Japanese yen to 2.4733/2.4863 from 2.4716/2.4771 at Thursday’s close, edged down against the British pound to 5.2626/5.2895 from 5.2246/5.2359, and went down vis-à-vis the euro to 4.5499/4.5732 from 4.5139/4.5237, previously.

The local currency traded mixed against Asean currencies.

It appreciated against the Indonesian rupiah to 230.6/231.9 from 231.4/232.0 at Thursday’s close, and climbed versus the Philippine peso to 6.50/6.54 from 6.54/6.56 previously.

However, it softened against the Singapore dollar to 3.0735/3.0897 from 3.0671/3.0740 and slipped versus the Thai baht to 12.0868/12.1556 from 11.9872/12.0204. - FMT