Ringgit eases against greenback ahead of US inflation report

 

KUALA LUMPUR: The ringgit ended lower against the US dollar today, continuing its downtrend as the greenback stayed firm ahead of the release of US inflation data tomorrow which may strengthen the case for a Federal Reserve (Fed) rate hike in May, analysts said.

At 6pm, the local note fell to 4.4160/4.4210 versus the greenback from Monday’s closing rate of 4.4070/4.4120.

SPI Asset Management managing director Stephen Innes said US yields opened higher this morning but eased as the day wore on. However that still weighed on the ringgit nonetheless, although the local currency managed to pare its losses.

Also weighing on sentiment, he noted, was disinflationary print on China’s producer price index (PPI), which suggests that consumer spending is still struggling to pick up.

“But the good news here is that lower inflation allows the People’s Bank of China to cut rates to stimulate the economy better, although the jury is still out on that.

“I think the ringgit foreign exchange market will remain somewhat defensive ahead of the US consumer price index (CPI) to be released tomorrow,” he told Bernama.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid noted the ringgit was trading at RM4.4213 at one point in the morning session but improved to around RM4.4167 later in the afternoon.

“However, most market participants are expecting the Fed to deliver another 25 basis points in the upcoming US Federal Open Market Committee meeting from May 2 to 3. Therefore, the US CPI print will be the key indicator to watch out for as it could tilt the decision (of the Fed),” he added.

The ringgit traded mostly lower against a basket of major currencies.

It decreased vis-a-vis the euro to 4.8196/4.8251 from 4.8063/4.8117 at Monday’s close and eased versus the British pound to 5.4939/5.5002 from 5.4801/45.863, but appreciated against the Japanese yen to 3.3173/3.3216 compared with 3.3346/3.3386 yesterday.

Against Asean currencies, the local note traded mixed.

It strengthened against the Philippine peso at 8.04/8.06 from 8.10/8.11 at Monday’s close and improved marginally versus the Singapore dollar at 3.3156/3.3196 from 3.3158/3.3200 yesterday.

It was lower compared with the Indonesian rupiah at 296.6/297.10 from 295.70/296.10 on Monday and decreased against the Thai baht to 12.8998/12.9193 from 12.8338/12.8547 previously. - FMT