KUALA LUMPUR – The ringgit traded higher against major currencies but was marginally lower against the US dollar at the opening today on a cautious tone ahead of the United States Federal Open Market Committee’s (FOMC) meeting minutes’ publication this week, said an economist.
At 9am, the ringgit eased slightly to 4.7870/7930 against the greenback compared with yesterday’s close of 4.7850/7890.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said even though the US markets were closed yesterday for a public holiday, it is believed that market sentiments are still reeling from last Friday’s US producer price index (PPI), which came in higher than expected at 0.9% in January against consensus estimates of 0.6%.
A higher PPI signifies higher inflation, which could lead to an interest rate increase.
On the local front, Afzanizam said today’s data on Malaysia’s exports would be in focus, with consensus estimates expecting overseas shipments to turn around to 3.0% growth in January from a 10% contraction in the prior month.
The lower-than-expected fourth quarter 2023 gross domestic product, which was announced last Friday, indicated that the Malaysian economy is susceptible to external demand gyration.
“Therefore, a positive export print would bolster hope for better prospects for the Malaysian economy this year,” Afzanizam said.
Meanwhile, Finance Minister II Datuk Seri Amir Hamzah Azizan expects the ringgit to strengthen against the US dollar this year as the US FOMC has signalled the end of interest rate hikes after raising the benchmark interest rates 11 times since March 2022 to the current rate of 5.25% to 5.50%.
He said the US Federal Reserve has probably reached the end of the interest rate hike period and is expected to chip off interest rates this year.
“If there are no material geopolitical events, we should see the ringgit strengthen throughout the year,” said the minister in an interview with Bernama yesterday.
Against a basket of major currencies, the ringgit was traded higher at the opening today.
It improved vis-a-vis the Japanese yen to 3.1858/1900 from 3.1913/1942 at yesterday’s close, increased against the British pound to 6.0254/0329 from 6.0358/0408 and rose slightly versus the euro to 5.1556/1621 from 5.1558/1601 previously.
The ringgit was traded mixed against other Asean currencies.
It strengthened versus the Thai baht to 13.2377/2590 compared with 13.2806/2976 at yesterday’s close, ticked up versus the Singapore dollar to 3.5544/5591 compared with 3.5555/5587, but was easier against the Indonesian rupiah at 306.2/306.7 from 306.0/306.5 previously.
The local note was flat against the Philippine peso at 8.53/8.55 from 8.53/8.54 last Friday. – February 20, 2024