THE ringgit extended its decline against the US dollar today as the 10-year US Treasury yield hit 5% while geopolitical tension in the Middle East further spurred a risk-off sentiment.

At 6pm, the local currency slipped by 0.49% to 4.7900/7975 against the greenback from Friday’s close of 4.7655/7700. The ringgit is now hovering at 25-year lows.

The yield on the benchmark 10-year US Treasury bond rose nine basis points to 5.014% at the time of writing.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the ringgit has also continued to remain weak as investors worry about how the Middle East conflict will play out.

“I believe the markets are still wary of the possible ground offensive (into Gaza) by Israeli forces (while) the unwavering support from developed countries for Israel could result in further escalation in the region,” he said.

“On that note, foreign exchange markets will continue to remain risk averse, which will result in higher demand for the US dollar.”

Earlier, Deputy Finance Minister I Ahmad Maslan said external factors have continued to drive the performance of the ringgit and regional currencies.

He said one factor driving the ringgit’s performance this year was the expectation that the US interest rate would remain higher for longer.

Bank Negara Malaysia governor Abdul Rasheed Ghaffour said today the central bank will do whatever is necessary to ensure the ringgit continues to adjust in an orderly manner.

Bank Negara has a number of market measures that can be deployed to boost the ringgit if needed, he said.

At the close, the ringgit was traded lower versus a basket of major currencies.

It slipped against the British pound to 5.8179/8270 from 5.7777/7831 at Friday’s close and depreciated vis-a-vis the euro to 5.0736/0815 from 5.0462/0510. It was lower against the yen at 3.1935/1985 from 3.1781/1813 previously.

The local note was also traded lower against other Asian currencies.

The ringgit weakened against the Thai baht to 13.1104/1359 from 13.0504/0681 on Friday and slid against the Singapore dollar to 3.4872/4932 from 3.4731/4767.

It also fell vis-a-vis the Philippine peso to 8.43/8.44 from 8.38/8.40 on Friday and was flat versus the Indonesian rupiah at 300.5/301.2. – Bernama, October 23, 2023.