Ringgit firms against US dollar in early trade

by BERNAMA / pic by MUHD AMIN NAHARUL

KUALA LUMPUR – The ringgit has extended its positive run against the US dollar on improving risk appetite for the local currency, an analyst said.

At 9 am, the local note rose to 4.2220/2260 versus the greenback from Wednesday’s close of 4.2290/2320. 

Speaking to Bernama, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said he expects the ringgit to continue to trade around the RM4.23-level today as economic uncertainties loom large.

“So far, the domestic economy is expected to remain resillient with the latest wholesale and retail trade data showing an 8.5 per cent increase to RM117.6 billion in February.

“This suggests that the (growth of the) services-oriented sector, which forms more than half of our economy, would accelerate following the further reopening of the economic sector,” he said.

Mohd Afzanizam noted that major equity market indices in the United States (US) recorded decent gains last night, while the short dated US Treasury securities saw much lower yields despite a higher-than-expected Producer Price Index (PPI).

The US PPI rose 11.2 per cent in March from 10.4 per cent in February, while the consensus was pencilling in a 10.6 per cent rise, he said.

“The market seems to expect that the inflation rate would reach its peak level soon, therefore the US Federal Reserve (Fed) might be inclined to not be too aggressive in their interest rate hike campaign.

“Meanwhile, other central banks such as the Reserve Bank of New Zealand and Bank of Canada have raised their benchmark interest rate by 50 basis points (bps) to 1.50 per cent and 1.00 per cent, respectively,” he said.

Mohd Afzanizam added that the overnight US Dollar Index slipped 0.44 per cent to 99.85 points as the two-year US Treasury yields fell by six bps to 2.35 per cent; signalling that market players could have pared their bet on the aggressive tightening by the Fed, given that the short term rates would typically respond to cental bank action.

Meanwhile, the ringgit was traded lower against a basket of major currencies.

It depreciated against the Singapore dollar to 3.1117/1151 from 3.1009/1033 on Wednesday, and weakened versus the Japanese yen to 3.3631/3665 from 3.3548/3574 yesterday.

The local unit decreased vis-a-vis the British pound to 5.5363/5416 from 5.5028/5067 and edged down against the euro to 4.5948/5992 from 4.5813/5845 previously.