Ringgit opens higher versus US dollar

The positive momentum is due to the softer demand for the greenback as US Fed is shifting to a slower pace of tightening its interest rate cycle

THE ringgit opened higher versus the US dollar today on softer demand for the greenback following news that the US Federal Reserve (Fed) is shifting to a slower pace of tightening its interest rates cycle, analysts said.

At 9am, the local note improved to 4.6360/6405 against the US dollar from yesterday’s close of 4.6950/6990.

SPI Asset Management MD Stephen Innes said the cooler-than-expected US October Consumer Price Index has the market priced in a 50 basis points (bps) Fed hike in December, down from 75bps, which is good news for the ringgit.

“The US dollar’s rise over the past year has left Malaysian markets increasingly exposed to capital outflow, so with one fell inflation swoop, that external vulnerability has been eased and should open the door to inbound investment given the softer US dollar and an expected less hawkish Fed.

“This should benefit the ringgit from a capital inflow perspective,” Innes told Bernama.

He added that the anticipated Fed downshift comes at a critical juncture and should offset Covid-19 related economic concerns in China and, at minimum, provide a less hawkish bridge for the eventual reopening.

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

It eased against the Singapore dollar to 3.3512/3549 from yesterday’s 3.3459/3490 and fell vis-a-vis the Japanese yen to 3.2682/2719 from 3.2048/207.

The local currency weakened against the euro to 4.7208/7254 from yesterday’s close of 4.6781/6821 and depreciated versus the British pound to 5.4084/4136 from 5.3387/3432 previously. – Bernama / pic Muhd Amin Naharul