Ringgit closes slightly lower against greenback
KUALA LUMPUR: The ringgit slipped 0.01% against the US dollar at the close, as the local note continued trading on the defensive yesterday, which offered some technical comfort for the ringgit.
At 6pm, the local note was traded at 4.2400/2490 from 4.2395/2440 at Wednesday's close.
SPI Asset Management managing partner Stephen Innes said the ringgit is under pressure mainly because of concerns that the US Federal Reserve (Fed) might keep interest rates higher for longer, as markets reassess the inflation outlook.
He added that the US dollar has strengthened recently as investors are becoming less certain that the Fed will cut rates in September.
Innes also said that the dollar's recent bid reflected a subtle but growing shift in sentiment, which markets are slowly walking back their conviction that the Fed will cut the interest rate in September.
'Sticky core inflation, fuelled in part by service-sector dynamics and the slow-burn impact of tariffs, is keeping the Fed in a wait-and-see mode.
'The ringgit remains vulnerable to a temporary widening in the US-Malaysia exchange rate spread. 'This does not necessarily break the broader 4.20-4.30 range, and we are still inside expected bands for now, but it does create a bias for further weakness,' he added.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that the ringgit weakened against the US dollar in the early morning session to 4.2575 in response to the US Consumer Price Index (CPI), which continued to increase in June to 2.7% from 2.4% previously.
'The latest CPI print appears to give the impression that the Fed may not be inclined to cut the Fed Fund Rate in the upcoming meeting in July.
'In a nutshell, the ringgit maintained its narrow-range trade in light of the ongoing uncertainties over the US tariffs,' Mohd Afzanizam said.
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