Ringgit recovers from yesterday’s reversal

THE ringgit gained slightly after a US Federal Reserve (Fed) committee member was open to the view of slowing the pace of rate hikes, thus causing the US dollar to lose a little of its strength.

At 6pm, the local note rose to 4.5750/5835 against the greenback from yesterday’s close of 4.5770/5850.

SPI Asset Management MD Stephen Innes said the ringgit is very much tracking broader US dollar moves.

“Fed Bank of Cleveland president Loretta Mester expressed openness to slowing the pace of rate hikes, and this seemed to pause the US dollar strength.

“I think we will see more tugs of war around the hawkish Fed narrative (but) Covid-19 cases are on the rise again in China, so that could limit gains (for the ringgit),” he told Bernama.

Mester was reported to have said that it was very appropriate for the Fed to slow down the rate hike from 75 basis points at the next meeting, with markets now hoping for a 50 basis-point increase at the next policy meeting on Dec 13 and 14.

The central bank has raised interest rates six times this year to tame inflation. The Fed had increased rates by 75 basis points for the fourth time in November.

Innes added that investors appear to shrug off concerns over domestic politics.

“I think political risk tends not to linger unless the result was earth-shattering, which it wasn’t,” he noted.

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

It fell versus the Singapore dollar to 3.3169/3235 from 3.3107/3169 at Monday’s close, slid against the euro to 4.6981/7068 from 4.6827/6909, depreciated versus the British pound to 5.4223/4324 from 5.4036/4131, and lower vis-a-vis the Japanese yen to 3.2380/2445 from 3.2278/2337 yesterday. — Bernama/pic by Bloomberg