KUALA LUMPUR: The ringgit traded easier against the US dollar at the opening today, as China’s lower-than-expected gross domestic product (GDP) data appeared to be the excuse for the weaker ringgit, said an analyst.
At 9.10 am, the local note was traded at 4.5400/5425 against the greenback compared with 4.5340/5405 at Monday’s close.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the close correlation between the Chinese yuan and the ringgit seemed to be taking shape as weak China data points had a spillover effect on the Malaysian economy.
“Following this, the ringgit-US dollar appears to be flirting around with its immediate resistant level of RM4.5491.
“However, thoughts of a possible shift in the US monetary policy will help provide support to the ringgit,” he told Bernama.
Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said the ringgit’s recent appreciation could be explained by numbers that point to a decrease in inflation in the US, which might cause the US Federal Reserve to ease monetary policy over the next few meetings.
He noted that markets would also be focusing on the release of the US Core Retail Sales data, as this indicator is likely to provide hints regarding US domestic consumption, which is an important driver of inflation.
At the opening, the ringgit was traded mostly lower against a basket of major currencies.
It weakened vis-a-vis the euro to 5.1025/1053 from 5.0971/1044 at Monday’s close, slipped marginally against the British pound to 5.9365/9398 from 5.9359/9444, but ticked up versus the Japanese yen to 3.2700/2720 against 3.2815/2864 yesterday.
The local note also traded lower against other Asean currencies.
The ringgit fell against the Thai baht to 13.1457/1583 from 13.0984/1225 Monday, declined versus the Singapore dollar to 3.4350/4371 from 3.4315/4366 previously and dropped slightly vis-a-vis the Philippines peso to 8.34/8.35 from 8.33/8.35 yesterday.
The ringgit also eased against the Indonesian rupiah to 302.3/302.7 from 301.9/302.5 previously.
US dollar nudges lower
The US dollar nudged lower on Monday while all Federal Reserve speakers went into a communications blackout ahead of the Federal Open Market Committee (FOMC) meeting next week, reported Xinhua.
The dollar index, which measures the greenback against six major peers, fell 0.08 per cent to 99.8404 in late trading.
The market has almost fully priced in a 25-basis-point rate hike at the next FOMC meeting. According to the US economic calendar, the US Census Bureau will release June retail sales data on Tuesday and the Fed will publish industrial production figures.
Meanwhile, the Empire State Manufacturing Index released by the Federal Reserve Bank of New York on Monday fell by 5.5 points to a reading of 1.1 in July from the prior month, topping market estimates of -4.3.
For the overall index, 29 per cent of respondents said that business conditions had improved over the month, while 27 per cent reported that conditions had worsened, according to the survey.
The pace of last week’s dollar decline “seemed unusually large,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, noting that the market would steady and see a firmer dollar this week.
In late New York trading, the euro increased to 1.1242 US dollars from 1.1234 dollars in the previous session, and the British pound decreased to 1.3082 US dollars from 1.3102 dollars in the previous session.
The US dollar bought 138.6470 Japanese yen, lower than 138.8260 Japanese yen of the previous session. The US dollar was down to 0.8600 Swiss francs from 0.8620 Swiss francs, and it fell to 1.3184 Canadian dollars from 1.3212 Canadian dollars. The US dollar was down to 10.2316 Swedish Krona from 10.2416 Swedish Krona.
Short-term rates to 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 RM43.88 billion in the conventional system and RM25.37 billion in Islamic funds.
Today, the central bank will conduct a RM1 billion conventional money market tender and a RM1 billion Qard tender, both for seven days.
It will also call for two reverse repo tenders, namely a RM1.5 billion tender for 31 days and a RM500 million tender for 92 days.
It 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 RM44.7 billion conventional overnight tender and RM24.7 billion Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.5400/5425
100 yen 3.2700/2720
1 pound 5.9365/9398
1 euro 5.1025/1053
1 3.4350/4371
100 baht 13.1457/1583
1 mln rupiah 302.3/302.7
100 pesos 8.34/8.356
Gold up
The physical price of gold as at 9.30 am stood at RM276.07 per gramme, up 17 sen from RM275.90 at 5 pm yesterday. – BERNAMA
