KUALA LUMPUR: The ringgit pared its losses to open flat against the US dollar today amid hawkish comments from the Federal Reserve (Fed) on a possible rate hike in the United States (US).
At 9 am, the local unit stood at 4.6435/6470 versus the greenback compared to 4.6430/6470 at yesterday’s close.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said Fed chair Jerome Powell remained adamant in his address to the US Congress that fighting inflation will continue to be the Fed’s immediate priority, hinting at another two rate hikes this year.
“Powell’s statement has quashed hope for a dovish tilt, leading to a decline in equity prices and higher bond yields.
“This would boost the US dollar as interest rate differentials favour the US assets in view of its positive carry,” he told Bernama, adding that the immediate resistance level for USD/MYR is located at 4.7495, while the support level is at 4.6257.
Meanwhile, the ringgit was traded lower against a basket of major currencies.
It depreciated versus the British pound to 5.9284/9328 from 5.8975/9026 at yesterday’s close, fell against the Japanese yen to 3.2728/2755 from 3.2716/2746 and weakened vis-a-vis the euro to 5.1018/1057 from 5.0678/0722 previously.
Similarly, the local note traded mostly lower against other Asean currencies.
The ringgit declined against the Thai baht to 13.3361/3523 from yesterday’s 13.3194/3381 and went down against the Singapore dollar to 3.4635/4666 against 3.4546/4578 previously.
It dropped against the Philippines’ peso to 8.35/8.36 from 8.34/8.35 on Wednesday, but was unchanged versus the Indonesian rupiah at 310.4/301.9
US dollar falls
The US dollar dropped on Wednesday as Federal Reserve Chairman Jerome Powell failed to meet investors’ hawkish expectations at a hearing in the US Congress, reported Xinhua.
The dollar index, which measures the greenback against six major peers, decreased 0.44 per cent to 102.0816 in late trading.
US inflation pressures continue to run high, and the process of getting inflation back down to 2 per cent has a long way to go, Powell said on Wednesday in remarks at a semiannual hearing organized by the House Financial Services Committee.
The Fed chair stays hawkish, but it is not sufficient to provide additional support to the US currency, said Vladimir Zernov, an analyst with market information supplier FX Empire.
By sticking to the balanced, data-dependent language deployed in last week’s press conference, Powell left investors betting that the ongoing deceleration in growth and inflation will translate into one – not two – rate hikes by year-end, said a report by Reuters quoting Karl Schamotta, chief market strategist at business payments company Corpay.
The probability of another hike of 25 basis points by the Fed in July decreased to less than 70 per cent from nearly 80 per cent in the early afternoon, according to data from the CME FedWatch Tool on Wednesday.
In late New York trading, the euro rose to US$1.0984 from US$1.0917 in the previous session, and the British pound rose to US$1.2773 from US$1.2759 in the previous session.
The US dollar bought 141.8060 Japanese yen, higher than 141.3700 Japanese yen of the previous session. The USdollar was down to 0.8930 Swiss franc from 0.8978 Swiss franc, and it decreased to 1.3161 Canadian dollars from 1.3229 Canadian dollars. The US dollar was down to 10.6505 Swedish Krona from 10.8024 Swedish Krona.
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 RM46.08 billion in the conventional system and RM28.47 billion in Islamic funds.
Today, the central bank will conduct a RM1 billion conventional money market tender for eight days and two RM1 billion Qard tenders, each one for eight days and 14 days, respectively.
It will also conduct two reverse repo tenders, consisting of a RM1 billion tender for 32 days and a RM500 million tender for 92 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 RM45.6 billion conventional overnight tender and RM25.5 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6435/6470
100 yen 3.2728/2755
1 pound 5.9284/9328
1 euro 5.1018/1057
1 SGD 3.4635/4666
100 baht 13.3361/3523
1 mln rupiah 310.4/301.9
100 pesos 8.35/8.36
Gold down
The physical price of gold as at 9.30 am stood at RM279.14 per gramme, down 15 sen from RM279.29 at 5 pm yesterday.– BERNAMA
