THE ringgit opened lower against the US dollar today on better demand for the greenback due to a more hawkish stand by the United States Federal Reserve (Fed), said an analyst.
The local note fell to 4.4735/4790 against the US dollar from yesterday’s close of 4.4730/4780.
Bank Muamalat Malaysia Bhd head of economics, market analysis and social finance Mohd Afzanizam Abdul Rashid said the 10-year US Treasury yield has surpassed the 4% level, hovering at 4.06% currently.
“While the European economies continue to record higher inflation rate for the latest print at 8.5%, it still resulted in a strong US dollar.
“As such, the ringgit should trade on the weaker side,” he said.
Meanwhile, SPI Asset Management managing director Stephen Innes said it has been a tough week for the Asian foreign exchange due to a more hawkish Fed narrative, with the market increasingly pricing in a higher terminal Fed funds rate.
He said as a consequence, higher US Treasury yields have taken a toll on the ringgit.
“The ringgit is now caught between misaligned macro drivers – a stronger China outlook and a persistent hawkish Fed.
“However, the restart of China data releases this week, where the PMI came in strong, alongside the likely pro-growth tone to the two-session policy event, should offer a better macro setup for Asian foreign exchange and the ringgit.
“For today, I expect the ringgit to trade in a tight range but may trade a tad stronger due to the China impulse, but the hawkish Fed will likely provide a drag until US economic data turns lower,” he said.
Innes said the 10-year US Treasury yield was up by eight basis points to 4.07%, the highest since November 9.
The ringgit traded higher against a basket of major currencies.
The local unit appreciated against the euro to 4.7468/7527 from 4.7539/7592 yesterday, improved against the Japanese yen to 3.2737/2780 from 3.2772/2813 and rose against the British pound to 5.3543/3609 from 5.3546/3606 previously.
However, the ringgit traded lower against Asean currencies.
It decreased versus the Singapore dollar to 3.3238/3281 from 3.3210/3252 yesterday and depreciated vis-a-vis the Thai baht to 12.8697/8929 from 12.8583/8789.
The ringgit was flat against the Philippine peso at 8.13/8.17 from 8.13/8.14 and fell against the Indonesian rupiah at 292.70/293.20 from 292.60/293.20 yesterday. – Bernama, March 3, 2023.
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