Ringgit hits 28-month high after Fed rate cut

 

KUALA LUMPUR: 

The ringgit has continued to strengthen against the US dollar, hitting a 28-month high versus the greenback after the US Federal Reserve (Fed) kept to its words and delivered a 50 basis points interest rate cut last night, an analyst said.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the Fed’s announcement has alleviated market uncertainties, adding that the Fed seems to be on track to ensure a soft landing for the US economy.

At the same time, he noted that the disinflationary trend would persist, allowing the Fed to focus on its other mandate, namely maximum employment.

Judging from the long-term Fed Fund Rate (FFR) of 2.9%, he told Bernama that the Fed is likely to continue to cut the benchmark interest rate in order to provide monetary support to the economy.

Meanwhile, he also said that Bank Negara Malaysia (BNM) is likely to maintain the overnight policy rate (OPR) at 3% for the remainder of the year as the prevailing monetary condition is supportive of growth.

Hence, he said the ringgit is poised to stage further appreciation in the near-term.

“The ringgit/US dollar is currently flirting around the immediate support level.

Should it breach this point, the next support level will be located at RM4.0728,

 he added.

At 6pm, the local currency surged to 4.2025/4.2105 versus the greenback from yesterday’s close of 4.2410/4.2460, retaining its position as one of the top-performing currencies in the Asian region.

The ringgit also traded higher against a basket of major currencies at the close.

It strengthened against the British pound to 5.5822/5.5928 from yesterday’s close of 5.6091/5.6158, ticked up vis-a-vis the Japanese yen to 2.9442/2.9500 from 2.9940/2.9977 yesterday and appreciated versus the euro to 4.6976/4.7065 from 4.7236/4.7292 previously.

Similarly, the local currency traded firmer against Asean currencies.

It rose against the Singapore dollar to 3.2567/3.2632 from 3.2792/3.2833 at yesterday’s close and gained against the Thai baht to 12.6983/12.7294 from 12.7472/12.7680 yesterday.

The ringgit had also strengthened against the Philippine peso to 7.55/7.58 from 7.61/7.62 yesterday and inched higher versus the Indonesian rupiah to 275.7/276.4 from 276.5/277 previously. - FMT