THE ringgit opened marginally lower against the US dollar today due to the lack of demand despite the lower US dollar index (DXY), said an analyst.

At 9am, the local note eased to 4.6190/6240 versus the greenback from yesterday’s close of 4.6115/6185. 

Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said the US’ headline consumer price index (CPI) for May came in lower than expected, proving its inflation rate is steadily declining.

“This suggests the US Federal Reserve (Fed) has demonstrated its credibility in bringing down inflation after raising the policy rate by 500 basis points since March last year.

“Perhaps it is time for the Fed to take stock of its past actions and allow the inflation rate to edge lower without having to resort to further monetary tightening,” he told Bernama.

With the DXY declining by 0.3% to 103.33 points, he said the ringgit may get a boost from lower US inflation as the Fed could take a break from the policy rate hike during the Federal Open Market Committee meeting later tonight.

“Technical indicators all suggest the ringgit is in oversold condition against the US dollar, so we could see the ringgit appreciating today,” said Afzanizam. 

The US headline CPI eased to 4% year-on-year in May 2023, lower than the consensus estimates of 4.1%. 

Similarly, core CPI moderated further to 5.3% during the month from 5.5% in May 2022. 

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

It fell versus the British pound to 5.8246/8309 from yesterday’s close of 5.7953/8041 and dropped vis-a-vis the euro to 4.9839/9893 from 4.9823/9898, but advanced against the Japanese yen to 3.2983/3021 from 3.3043/3096. 

The local note also traded mostly lower against other Asean currencies. 

The ringgit decreased against the Singapore dollar to 3.4411/4453 from 3.4399/4454, eased versus the Indonesian rupiah to 310.7/311.2 compared with 310.2/310.8 yesterday, and slid against the Philippine peso to 8.26/8.28 from 8.24/8.26 previously.

However, the local unit rose against the Thai baht to 13.3155/3368 from 13.3442/3699 yesterday. – Bernama, June 14, 2023.