THE ringgit reversed yesterday’s gains to close slightly lower against the US dollar today on better demand for the greenback as US rate cut expectations fade while the faltering China reopening risk rally continues to stymie Asian foreign exchange, an analyst said.

At 6pm, the ringgit ended the day at 4.3140/3185 against the greenback from yesterday’s close of 4.2960/3005.

SPI Asset Management MD Stephen Innes said markets were positioning long Asian foreign exchange (forex) (ringgit) for diverging growth trends between China and the US.

“Still, in the wake of the strong US non-farm payrolls report and the rewind of the anti-China play, traders have shifted Asian forex sentiment from buy all to hold.

“Asia-Pacific currencies have high export linkages with China, which is positive on a China reopening bounce, however, they are absent from the top 10 carry baskets given Asian central banks have raised rates much less and to lower levels than others,” he told Bernama. 

Hence, he said that in a higher US rates environment, a much bigger pickup in China activity data is needed to fuel the “China factor” to overcome the lack of a “carry factor”. 

“We remain very positive on the ringgit but less so in a more hawkish US Federal Reserve environment that we seem to be vectoring towards.

“Hopefully, it’s only a short-term blip and the US economy starts to slide again, triggering more flows back to Asia,” he added.

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

The local note inched down against the Singapore dollar to 3.2627/2664 from yesterday’s close of 3.2472/2511 and weakened vis-a-vis the Japanese yen to 3.2967/3006 from 3.2872/2909. 

It depreciated against the British pound to 5.2381/2435 from 5.1990/2045 and fell versus the euro to 4.6432/6480 from 4.6203/6252. — Bernama / pic by Bloomberg