Ringgit opens higher against US dollar as US-China trade tensions ease
KUALA LUMPUR: The ringgit opened higher against the US dollar today, as easing US-China trade tensions brought relief to the financial markets, reducing recession fears and boosting risk-on sentiment among the traders and investors, an analyst said.
At 8.01 am, the local note appreciated to 4.3045/3245 versus the US dollar compared to Tuesday's close of 4.3185/3250.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US consumer price index (CPI) grew 2.3 per cent year-on-year in April, slightly below market expectations of 2.4 per cent, while core CPI sustained at 2.8 per cent.
"The moderation in CPI also suggests that concerns over US tariff-induced inflation may take a backseat for now," he told Bernama.
Mohd Afzanizam said the economic data also indicates that the US Federal Reserve (Fed) has the policy space to reduce the Fed Fund Rate going forward.
Therefore, the Federal Open Market Committee meeting on June 17 and 18 will be crucial, as the Fed is set to publish its latest quarterly macroeconomic forecast, he added.
"The latest National Federation of Independent Business Optimism Index, which reflect small business sentiment, declined 95.8 points in April, the fourth consecutive months of decline since January this year.
"Hence, the case for lower interest rate is valid, as weak business sentiments would result in reduced capital spending and hiring appetite," he said.
On ringgit, Mohd Afzanizam noted that the local note has depreciated by 2.8 per cent against the US dollar since May 5, as tariff shocks have become more palatable with the US and China agreeing to allow some concessions to further negotiate the trade deals.
It was reported that the ringgit weakened against the greenback to as low as RM4.34 yesterday's morning, but recovered to RM4.3218 in the afternoon.
"This suggests that support for the ringgit was quite evident, as the risk-on mode in the global equities market should benefit the emerging market currencies, including ringgit.
"On that note, the US dollar-ringgit pair is expected to oscillate around RM4.32 to RM4.33 today," he said.
At the opening, the ringgit traded mostly lower against a basket of major currencies.
It was up against the Japanese yen at 2.9179/9319 from 2.9181/9227 at Tuesday's close, but fell vis-a-vis the euro to 4.8146/8370 from 4.7961/8033 and lower versus the British pound at 5.7258/7524 from 5.7056/7142 previously.
However, the ringgit traded higher against its ASEAN peers.
It was marginally higher versus the Singapore dollar to 3.3076/3235 from 3.3084/3137 at Tuesday's close and strengthened against the Indonesian rupiah to 258.8/260.2 from 259.7/260.2 previously.
The ringgit also improved against the Thai baht to 12.9521/13.0229 from 12.9958/13.0240 at Tuesday's close and rose vis-a-vis the Philippine peso at 7.71/7.76 from 7.74/7.76 previously. - Bernama
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