KUALA LUMPUR: The ringgit opened higher against the US dollar this morning despite the prevailing cautious sentiments surrounding China’s economic growth.
At 9.04 am, the local note strengthened to 4.6100/6155 against the greenback from 4.6235/6280 at Thursday’s close.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the ringgit is anticipated to move within a tight range of around RM4.62, given the mixed signals this week.
“In China, the People’s Bank of China (PBOC) decided to cut the seven-day reverse repo by 10 basis points to 1.90 per cent in order to shore up the economy.
“While we welcome the US Federal Reserve’s (Fed) move to maintain the Fed Fund Rate, it appears that the market is on a risk-off mode as major central banks remain adamant on rate hikes to bring down inflation, while China is struggling to maintain the pace of its economic growth,” he told Bernama.
He also said the European Central Bank (ECB) Governing Council raised the policy rate by 25 basis points yesterday, bringing the interest rate on marginal refinancing operation, marginal lending facility and deposit facility to 4.00 per cent, 4.25 per cent and 3.50 per cent, respectively.
“The ECB remain hawkish in its monetary policy stance as the inflation rate is projected to decline towards the 2.0 per cent target by 2025, implying that they need to maintain a restrictive stance for a while in order to ensure their price stability objective can be achieved,” said Mohd Afzanizam.
Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said the market’s indecisiveness was due to weak macroeconomic data, noting that the US Core Retail Sales data for May failed to provide a clear direction for the market.
“From a technical point of view, if the USD/MYR manages to break below 4.6100, it could drop to as low as 4.5750 and 4.5250 in a few days,” he said.
In the meantime, the ringgit was traded lower against a basket of major currencies.
It continued to depreciate versus the British pound to 5.8939/9009 from 5.8543/8600 on Thursday, fell against the Japanese yen to 3.2905/2947 from 3.2781/2816 yesterday, and dropped vis-a-vis the euro to 5.0461/0521 from 5.0151/0200 previously.
However, the local note traded mixed against other Asean currencies.
The ringgit eased against the Thai baht to 13.3141/3357 from Thursday’s 13.2783/2981 and slid against the Singapore dollar to 3.4488/4534 against 3.4442/4481 yesterday, but was higher versus the Indonesian rupiah at 308.2/308.7 from 309.1/309.6 and remained flat against the Philippines’ peso at 8.26/8.27.
US dollar dives
The US dollar suffered substantial losses on Thursday due to the fall of US Treasury yields, as well as the higher-than-expected jobless claims, reported Xinhua.
The dollar index, which measures the greenback against six major peers, hit a daily low of 102.0910, down from 103.20 on Thursday morning.
The benchmark 10-year Treasury yield lost nearly 7 basis points to 3.723 per cent on Thursday, while the two-year Treasury yield saw a mild decrease to 4.65 per cent.
Analysts said markets seemed to be largely looking past the Fed’s signaling from Wednesday that it may need to raise rates further this year.
The US Bureau of Labour Statistics reported Thursday that applications for jobless claims were 262,000 for the week ending June 10, more than what analysts were expecting. Continuing jobless claims, which represent the number of people already receiving benefits, were at 1,775,000 during the week ending June 3, also saw an increase of 10,000 from the previous week.
Retail sales increased 0.3 per cent month on month in May after rising 0.4 per cent in April, according to the US Department of Commerce. Consumers spent more at most categories of retailers, including grocery, furniture and electronics stores. They spent less at gasoline stations, which could reflect declining prices at the pump.
“The recession will be delayed as long as consumers continue to spend,” said Oren Klachkin, economist at Oxford Economics.
Spurred by the retail sales data, all three major US indexes were in the green on Thursday, rising more than 1 per cent apiece, with the blue-chip Dow industrials up more than 400 points.
The euro has pushed higher on the European Central Bank (ECB)’s announcement on Thursday to hike interest rates by 25 basis points as expected.
In late New York trading, the euro rose to 1.0950 dollars from 1.0836 dollars in the previous session, and the British pound rose to 1.2781 dollars from 1.2668 US dollars in the previous session.
The US dollar bought 140.3150 Japanese yen, higher than 139.6670 Japanese yen of the previous session. The US dollar was down to 0.8913 Swiss francs from 0.8992 Swiss francs, and it decreased to 1.3211 Canadian dollars from 1.3313 Canadian dollars. The US dollar was down to 10.5898 Swedish Krona from 10.7148 Swedish Krona.
Foreign exchange rates issued by Malayan Banking Bhd:
| SELLING TT/OD | BUYING TT | BUYING OD | |
| 1 US Dollar | 4.6830 | 4.5490 | 4.5540 |
| 1 Australian Dollar | 3.2330 | 3.1040 | 3.0800 |
| 1 Brunei Dollar | 3.5020 | 3.4010 | 3.3840 |
| 1 Canadian Dollar | 3.5290 | 3.4330 | 3.4070 |
| 1 Euro | 5.1340 | 4.9680 | 4.9050 |
| 1 New Zealand Dollar | 2.9260 | 2.8180 | 2.7950 |
| 1 Papua N Guinea Kina | N/A | N/A | N/A |
| 1 Singapore Dollar | 3.5020 | 3.4010 | 3.3840 |
| 1 Sterling Pound | 5.9950 | 5.8090 | 5.7400 |
| 1 Swiss Franc | 5.2330 | 5.1150 | 5.0540 |
| 100 UAE Dirham | 128.7000 | 121.9900 | 122.2400 |
| 100 Bangladesh Taka | 4.3890 | 4.1160 | 3.9450 |
| 100 Chinese Renminbi | 65.8000 | 63.3000 | N/A |
| 100 Danish Krone | 70.4300 | 64.8000 | 64.2200 |
| 100 Hongkong Dollar | 60.3700 | 57.3500 | 57.3000 |
| 100 Indian Rupee | 5.8000 | 5.4400 | 5.2500 |
| 100 Indonesian Rupiah | 0.0323 | 0.0293 | 0.0244 |
| 100 Japanese Yen | 3.3510 | 3.2460 | 3.2160 |
| 100 New Taiwan Dollar | 16.3000 | N/A | N/A |
| 100 Norwegian Krone | 45.6500 | 41.9900 | 41.3600 |
| 100 Pakistan Rupee | 1.6600 | 1.5500 | 1.3600 |
| 100 Philippine Peso | 8.5000 | 8.0100 | 7.8200 |
| 100 Qatar Riyal | 129.5700 | 123.0100 | 123.2400 |
| 100 Saudi Riyal | 125.9300 | 119.5500 | 119.7900 |
| 100 South Africa Rand | 26.5500 | 23.9800 | 23.7400 |
| 100 Sri Lanka Rupee | 1.5900 | 1.4300 | 1.2300 |
| 100 Swedish Krona | 45.4400 | 41.3700 | 40.8900 |
| 100 Thai Baht | 14.1000 | 12.5100 | 12.1100 |
Short-term rates
Short-term rates are expected to remain stable today on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the financial system.
Liquidity is estimated at RM46.44 billion in the conventional system and RM33.43 billion in Islamic funds.
Today, the central bank will conduct two RM1.5 billion conventional money market tenders, each one for seven days and 14 days, respectively.
It will also conduct one Qard tender of RM2 billion for seven days and one reverse repo tender of RM855 million for 31 days.
The central bank also announced the availability of reverse repo, sale and buy-back agreements as well as Collateralised Commodity Murabahah facilities for tenors of one to three months.
At 4 pm, BNM will conduct up to RM43.3 billion conventional overnight tender and RM30.4 billion for Murabahah overnight tender.
Gold price
The physical price of gold as at 9.30 am stood at RM281.31 per gramme, up RM2.99 from RM278.32 at 5 pm yesterday.
Gold futures on the COMEX division of the New York Mercantile Exchange rose on Thursday as the US dollar weakened, reported Xinhua.
The most active gold contract for August delivery rose 1.80 US dollars, or 0.09 per cent, to close at 1,970.70 dollars per ounce.
The US Federal Reserve decided to keep key rates unchanged at its June monetary policy meeting, allowing itself time to assess additional data. The decision plunged the US dollar and supported gold.
The European Central Bank lifted interest rates by a quarter of a percentage point, as expected, capping gold’s growth somewhat.
Economic data released Thursday are mixed. The US Labour Department reported that US initial jobless claims came in at 262,000 in the week ending June 10, unchanged from the previous week’s revised level. Economists had expected jobless claims to dip to 249,000 from the 261,000 originally reported for the previous week.
The Federal Reserve reported that US industrial production declined 0.2 per cent in May from April, ending two consecutive months of increases.
The New York Federal Reserve’s Empire State Index jumped to a reading of 6.6 in June from negative 31.8 in the prior month. Economists had expected a reading of negative 16.
The Philadelphia Federal Reserve’s manufacturing index slipped further to a reading of negative 13.7 in June from negative 10.4 in the prior month. Economists had expected a reading of negative 14.8.
The US Commerce Department reported that US retail sales rose 0.3 per cent from April to May, boosted by stronger sales of auto and parts dealers. Economists had been expecting a decline in sales for the month.
Silver for July delivery fell 15.80 cents, or 0.66 per cent, to close at 23.947 dollars per ounce. Platinum for July delivery rose 11.90 dollars, or 1.21 per cent, to close at 991.90 dollars per ounce. – BERNAMA-XINHU
