Ringgit rises following US credit rating downgrade

 The US dollar appears to be a little edgy despite heightened economic uncertainties, says analyst.

KUALA LUMPUR:

 The ringgit ended higher against the US dollar today, supported by a weaker US Dollar Index (DXY), which fell 0.71% to 100.376 following a downgrade of the US government’s sovereign credit rating.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said the decline in the DXY was due to populist measures by President Donald Trump’s administration, which are likely to compromise the US government’s ability to contain the widening budget gap and ballooning debt.

“While Moody’s Rating has maintained its assessment of the US dollar’s special status as a global reserve currency, the current tariff shocks may have resulted in traders and investors reassessing such a proposition.

“However, this is a structural issue that may require a longer time horizon,” he told Bernama.

Meanwhile, he said the US dollar appears to be a little edgy despite heightened economic uncertainties, which normally result in significant appreciation of the US dollar.

At 6pm, the local note rose to 4.2870/4.2945 versus the greenback from Friday’s close of 4.2900/4.2980.

In addition, the ringgit traded lower against a basket of major currencies.

It depreciated versus the Japanese yen to 2.9596/2.9650 from 2.9470/2.9527, eased vis-à-vis the euro to 4.8344/4.8429 from 4.8022/4.8112, and went down against the British pound to 5.7420/5.7521 from 5.7018/5.7125 previously.

The local note was mixed against its Asean peers.

It appreciated vis-à-vis the Philippine peso to 7.69/7.71 from 7.71/7.73 last Friday, but decreased against the Singapore dollar to 3.3135/3.3195 from 3.3041/3.3105, and declined against the Thai baht to 12.9630/12.9924 from 12.9003/12.9318.

However, the ringgit was flat against the Indonesian rupiah at 260.8/261.4 from 260.8/261.5. - FMT