The local currency weakened slightly as tariff measures, a more hawkish Fed outlook and rising oil prices pressured sentiment, says analyst.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said Asian currencies traded mixed today amid uncertainties surrounding crude oil prices and the US tariff move, with the US dollar-ringgit pair trading within a narrow range of RM4.0890 to RM4.0977.
“Global growth could slow as tariffs can disrupt the supply chain.
“At the same time, the ongoing blockade in the Strait of Hormuz will exert upward pressure on crude oil prices. So external risks have become elevated, which could lead to higher demand for the US dollar,” he told Bernama.
In a statement today, the investment, trade and industry ministry (Miti) said it will continue to engage with the US over the 10% forced labour-related tariff imposed on Malaysian exports effective today.
Miti said the new tariff started from 12.01am US time on July 24, following the expiry of the temporary tariff imposed under Section 122 of the Trade Act 1974.
Meanwhile, SPI Asset Management managing partner Stephen Innes said the ringgit closed with a slight weakening bias, reacting to both the US administration’s latest tariff measures and a modest hawkish repricing along the Federal Reserve (Fed) curve as oil prices rose this week amid renewed escalation in the US-Iran conflict.
“Oil prices are likely to remain the biggest driver. A sustained rise could influence the Fed’s policy decision if officials become concerned that energy inflation is spreading into other parts of the economy,” he said.
However, he noted that Malaysia as an energy exporter is better positioned than many of its regional peers, meaning the ringgit could still weaken against the US dollar in a higher oil price environment while outperforming other Asian currencies.
At 6pm, the local currency edged down to 4.0885/4.0935 versus the greenback from yesterday’s close of 4.0870/4.0910.
Meanwhile, the ringgit traded higher against a basket of major currencies at the close today.
It strengthened against the Japanese yen to 2.4976/2.5008 from 2.5015/2.5041 at yesterday’s close, appreciated vis-a-vis the euro to 4.6556/4.6613 from 4.6641/4.6686, and went up versus the British pound to 5.4442/5.4509 from 5.4647/5.4701 previously.
The ringgit traded mixed against regional currencies.
It rose against the Indonesian rupiah to 227.6/227.9 from 227.8/228.1 at the close yesterday and strengthened versus the Philippine peso to 6.61/6.62 from 6.62/6.63 yesterday.
However, the local currency fell vis-a-vis the Thai baht to 12.1414/12.1606 from 12.0860/12.1021 at the previous close and was flat versus the Singapore dollar at 3.1667/3.1708 compared with 3.1667/3.1701 yesterday. - FMT
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