KUALA LUMPUR: The ringgit opened lower against the US dollar today amid rising concerns over the future prospect for the US federal funds rate, said Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid.
Afzanizam said the currency market appeared to be directionless in the past two days as participants were still unsure about the prospect of the federal funds rate ahead of the US Federal Open Market Committee (FOMC) meeting scheduled on Dec 12-13.
“In the meantime, next week’s US consumer price index (CPI) report on Nov 14 would be closely monitored. Thus far, the core CPI had come down to 4.1% year-on-year in September 2023 from as high as 6.6% in September 2022.
“It appears that restrictive monetary policy has taken a toll on inflation and it seems that the federal funds rate has already peaked,” he told Bernama.
He added that the markets are seemingly not convinced given that some of the Federal Reserve officials’ rhetoric on inflation remains visible.
Hence, Afzanizam said this could provide support to the US dollar and the USD/MYR may linger around at the prevailing level.
The US Dollar Index (DXY) remained steady at 105.536 points yesterday after dipping to as low as 105.021 points last Friday following the release of October’s non-farm payrolls.
The 10-year US Treasury has yielded lower to 4.49%, giving a nine basis-point decline while Brent crude is currently hovering below US$80 per barrel at US$79.54 (RM376.34) per barrel.
At 9am, the ringgit fell to 4.6905/4.6955 versus the greenback from Wednesday’s closing rate of 4.6800/4.6860.
Meanwhile, the ringgit traded lower versus a basket of major currencies.
It eased against the Japanese yen to 3.1071/3.1106 from 3.1045/3.1087 at Wednesday’s close, decreased versus the euro to 5.0207/5.0261 from 4.9917/4.9981, and weakened against the British pound to 5.7595/5.7656 from 5.7321/5.7394 yesterday.
The local currency was also traded lower against other Asean currencies.
It depreciated against the Singapore dollar to 3.4573/3.4612 from 3.4493/3.4540 on Wednesday and shrank against the Thai baht to 13.2019/13.2223 from 13.1453/13.1670 previously.
It declined against the Philippine peso to 8.38/8.40 from 8.35/8.37 and slipped vis-a-vis the Indonesian rupiah to 299.6/300.1 from 298.9/299.5 at the close on Wednesday. - FMT
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