Stronger greenback drags ringgit lower in early trade


KUALA LUMPUR – The ringgit traded easier against the US dollar this morning as the positive greenback sentiment curbed appetite for the local currency.

At 9.11 am, the local note slipped to 4.2325/2370 versus the US dollar from 4.2305/2330 at Thursday’s close.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the overnight US Dollar Index strengthened by 0.41 per cent to 100.28 points as the United States’ (US) economic indicators point to better prospects amid rising inflationary pressures.

He said the US Michigan Consumer Sentiment Index rose to 65.7 points in April, beating the consensus forecast of 59.0 points, while the Import Price Index expanded to 12.5 per cent in March from 10.9 per cent in February.

This has bolstered the case for an aggressive interest rate hike by the US Federal Reserve, with the two-year US Treasury notes yield up by about 11 basis points to 2.45 per cent.

“At the moment, Bank Negara Malaysia is expected to maintain its policy stance, although chances that it would raise the overnight policy rate are increasing in light of the improving economic conditions amidst rising inflationary pressures.

“As such, the ringgit should remain around RM4.23 today,” he told Bernama.

Elsewhere, the Monetary Authority of Singapore has decided to tighten its monetary policy by re-centering the mid-point of the Singapore Dollar Nominal Effective Exchange Rate yesterday, increasing the rate of appreciation of the exchange rate policy band.

This has resulted in the USD-SGD strengthening to SGD1.3569 per US dollar.

The Bank of Korea has also taken similar steps when the central bank raised its benchmark interest rate by 25 basis points to 1.50 per cent.

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

It appreciated against the Singapore dollar to 3.1181/1219 from 3.1238/1258 on Thursday and strengthened versus the Japanese yen to 3.3485/3523 from 3.3744/3767 yesterday.

The local unit increased vis-a-vis the British pound to 5.5226/5284 from 5.5580/5613 and firmed against the euro to 4.5745/5793 from 4.6180/6207 previously.