KUALA LUMPUR: The ringgit opened slightly higher against the US dollar and other major currencies on the rising expectation that the US Federal Reserve (Fed) would not raise interest rates when it meets next week.
At 9.05 am, the local note climbed to 4.6720/6770 against the greenback from Monday’s close of 4.6725/6760.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the US Federal Reserve will release its quarterly forecasts after the meeting on Sept 19-20.
“The forecasts will provide more insight into their future monetary policy direction for the near term and next year. While the Fed may also maintain its current stance, market sentiment remains uncertain this time,” he told Bernama.
He reckons that the ringgit will continue to hover in the range of RM4.66 to RM4.68 to the greenback.
The ringgit traded mostly higher against a basket of major currencies.
It rose against the British pound to 5.8414/8477 from 5.8551/8595 at Monday’s close and climbed against the Japanese yen to 3.1852/1888 from 3.1855/1881.
However, it depreciated against the euro to 5.0187/0240 from 5.0145/0183 previously.
The local note also traded mostly firmer against other Asean currencies.
It gained vis-a-vis the Singapore dollar to 3.4313/4354 from 3.4334/4362 at Monday’s close, improved against the Thai baht to 13.1339/1528 from 13.1583/1755 and was slightly better against the Philippine peso at 8.23/8.25 from 8.24/8.25.
It traded almost unchanged against the Indonesian rupiah at 304.7/305.2 from 304.7/305.1, previously.
US dollar rises amid strong job data
The US dollar increased in late trading on Thursday, as US jobless claims outperformed the expectation, fueling a Fed rate hike speculation, reported Xinhua.
The dollar index, which measures the greenback against six major peers, rose 0.19 per cent to 105.0588 in late trading.
US initial jobless benefit claims fell by 13,000 to 216,000 in the week ending Sept. 2, hitting the lowest level since mid-February, the US Bureau of Labour Statistics (BLS) said Thursday. The claims have fallen for four weeks in a row.
The unemployment report for August released last week indicated strong hiring with gradual softening in labour, said Michael Feroli, chief US economist at JP Morgan Chase. “There is still no sign that companies are laying off workers.”
The nonfarm business sector labour productivity increased 3.5 per cent in the second quarter of 2023, the BLS also reported Thursday. Output increased 1.9 per cent and hours worked decreased 1.5 per cent in the second quarter of 2023.
“With oil prices on the rise and consumption remaining strong, investors are bracing for a slower disinflation process and a more gradual pivot toward rate cuts from the Federal Reserve,” said Karl Schamotta, chief market strategist at Corpay.
Earlier in the European session, Eurostat revealed that the bloc’s gross domestic product (GDP) for the second quarter grew by just 0.1 per cent, lower than the 0.3 per cent expected by the markets.
In late New York trading, the euro was down to 1.0695 US dollars from 1.0725 dollars in the previous session, and the British pound fell to 1.2470 US dollars from 1.2505 dollars in the previous session.
The US dollar bought 147.1700 Japanese yen, lower than 147.6910 Japanese yen of the previous session. The US dollar was up to 0.8928 Swiss francs from 0.8915 Swiss francs, and it rose to 1.3682 Canadian dollars from 1.3653 Canadian dollars. The US dollar rose to 11.1429 Swedish krona from 11.1229 Swedish krona.
Short-term rates remain stable
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 RM36.93 billion in the conventional system and RM24.03 billion in Islamic funds.
Today, the central bank will conduct two conventional money market tenders worth RM1 billion for seven days and RM500 million for 14 days.
It will also call for two reverse repo tenders, comprising a RM1.5 billion tender for 31 days and a RM500 million tender for 91 days, as well as a RM500 million Qard tender for seven days.
BNM 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, it will conduct up to an RM37.4 billion conventional overnight tender and RM23.5 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6730/6780
100 yen 3.1774/1810
1 pound 5.8356/8419
1 euro 5.0062/0115
1 SGD 3.4249/4289
100 baht 13.1378/1571
1 mln rupiah 304.8/305.3
100 pesos 8.23/8.25
Gold up
The physical price of gold as at 9.30 am stood at RM279.75 per gramme, up 59 sen from RM279.16 at 5 pm yesterday. – BERNAMA
