THE ringgit opened higher today as demand for the US dollar declined after the US Consumer Price Index (CPI) data came in lower than expected at 3.2% in October versus consensus estimates of 3.3%. 

At 9.09am, the ringgit strengthened to 4.6550/6600 against the greenback from yesterday’s close of 4.7165/7210.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the US inflation rate for October was lower compared with the last two months, when the CPI grew by 3.7% in each month. 

Meanwhile, core CPI moderated further to 4% in October from a high of 6.6% in September last year.

Afzanizam said the inflation outturn suggests that the US Federal Reserve has delivered its mandate to bring down inflation and the federal funds rate has neared its peak.

The two-year US Treasury yield was down by 21 points to close at 4.83% and and the 10-year yield fell by 19 basis points to 4.45%, while the US Dollar Index (DXY) dropped 1.47% to 104.081 points.

“The ringgit is expected to trend upwards following the decline in the US dollar,” he told Bernama. 

The Finance Ministry said the flexible ringgit exchange rate plays an important role in reducing the impact of external shocks on domestic economic activity.

Bank Negara Malaysia (BNM) will continue to manage risks from domestic and external developments to deal with volatility in the foreign exchange market and be prepared to use its operational policy instruments to ensure orderly market conditions, it said.

“BNM, as the central bank responsible for the stability of the financial and currency markets, will always ensure that the adjustment of the ringgit is in order,” according to the ministry’s response on the Parliament website on Tuesday.

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

It gained versus the Japanese yen to 3.0914/0949 from 3.1091/1123 at yesterday’s close, but eased against the euro to 5.0605/0659 from 5.0570/0619 yesterday and fell vis-a-vis the British pound to 5.8113/8175 from 5.8032/8087.

The local currency traded mostly firmer against other Asean currencies.

It appreciated against the Singapore dollar to 3.4487/4526 from 3.4675/4713 yesterday and was higher vis-a-vis the Indonesian rupiah at 296.5/297.0 compared with 300.4/300.9 previously. 

However, the ringgit fell against the Thai baht to 13.1001/1212 from 13.0760/0946 yesterday but ticked up to 8.34/8.36 versus the Philippine peso from 8.41/8.42 at yesterday’s close. – Bernama, November 15, 2023.