KUALA LUMPUR: The ringgit continued to open weaker versus the US dollar today as cautious sentiments prevailed ahead of the United States (US) Federal Reserve’s (Fed) interest rate decision on Wednesday.
At 9.06 am, the local note eased to 4.6220/6270 versus the greenback, compared with Monday’s close of 4.6175/6220.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the equities market appears to be positive, boosted by the anticipation that the US Fed might pause its interest rate hikes ahead of the US Consumer Price Index (CPI) report on Tuesday.
“As such, ringgit could experience a slight appreciation today,” he told Bernama.
Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said most experts believe that the Fed should keep the interest rate unchanged at 5.25 per cent.
“If that happens, the US dollar could fall against ringgit. But if the interest rate goes up to 5.5 per cent, the US dollar-ringgit could quickly rise to 4.7400,” said Diniz.
From the technical point of view, he said the USD/MYR pair could resume its bullish movement if it manages to break above 4.6400.
“A downward move is likely if the US dollar-ringgit breaks below the 4.5700 level, and it could drop to as low as 4.5250 in a few days,” he added.
Meanwhile, the ringgit was traded better against a basket of major currencies.
It was higher versus the British pound to 5.7863/7925 from Monday’s closing of 5.8157/8214, went up vis-a-vis the euro to 4.9742/9796 from 4.9804/9853 yesterday, and rose against the Japanese yen to 3.3099/3138 from 3.3162/3197 previously.
At the same time, the local note traded mixed against other Asean currencies.
The ringgit increased slightly against the Singapore dollar to 3.4403/4442 from 3.4408/4444 on Monday and strengthened versus the Thai baht to 13.3326/3535 from 13.3400/3599 previously.
However, it was marginally lower against the Indonesian rupiah to 310.9/311.4 from 310.6/311.0 yesterday and eased to 8.24/8.26 against the Philippines’ peso from 8.23/8.25 previously.
Dollar gains ahead
Meanwhile, higher US Treasury yields strengthened the US dollar modestly on Monday, reported Xinhua.
The dollar index, which measures the greenback against six major peers, rose 0.09 per cent to 103.6455 in late trading.
The US dollar gained support as the yield of US 10-year Treasury bonds moved up on Monday morning though it turned into losses in the afternoon.
The US Bureau of Labour Statistics is scheduled to release the May consumer price index (CPI) survey on Tuesday morning. If the CPI data is stronger than expected or even unexpectedly higher than the previous reading, it would likely increase the likelihood of a rate hike by the Federal Reserve and potentially change the weak trajectory of the US dollar index.
“Investors have been looking forward to a Fed pause in the rate hiking cycle since they started over a year ago. They’re trying to get out ahead of that,” said Burns McKinney, portfolio manager of NFJ Investment Group in Dallas.
Euro moved up against the US dollar on Monday morning as the potential of divergent decisions from the Federal Reserve and European Central Bank this week drove price action, noted Monex USA, a provider of foreign exchange, risk management, and international payment solutions.
In late New York trading, the euro rose to US$1.0756 from US$1.0749 in the previous session, and the British pound fell to US$1.2505 from US$1.2575 in the previous session.
The US dollar bought 139.5750 Japanese yen, higher than 139.4000 Japanese yen of the previous session. The US dollar was up to 0.9096 Swiss francs from 0.9031 Swiss francs, and it rose to 1.3371 Canadian dollars from 1.3351 Canadian dollars. The US dollar decreased to 10.8117 Swedish Krona from 10.8235 Swedish Krona.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6220/6270
100 yen 3.3099/3138
1 pound 5.7863/7925
1 euro 4.9742/9796
1 SGD 3.4403/4442
100 baht 13.3326/3535
1 mln rupiah 310.9/311.4
100 pesos 8.24/8.26
– BERNAMA-XINHUA
