KUALA LUMPUR: The ringgit extended its gains to open higher this morning, amidst positive developments in the Asian foreign exchange (forex) market.
Risk appetites improved after Malaysia and China’s central banks moved to stop the slide in their respective currencies, dealers said.
At 9 am, the local unit rose to 4.6570/6625 versus the greenback compared to 4.6640/6685 at Tuesday’s close.
SPI Asset Management managing director Stephen Innes said the People’s Bank of China (PBOC) had fixed the yuan stronger than anticipated and this had weighed on the greenback.
Talks of the PBOC selling US dollars in the open market to support the Chinese yuan also helped to stabilise the ringgit, he said.
“On another note, the Japanese Finance Minister’s statement that the Japanese yen is too weak also had traders on the lookout for US dollar selling from Japan’s Ministry of Finance.
“These are all Asia-centric, thus it has helped all Asian forex to strengthen, including the ringgit,” he said to Bernama, adding that risk sentiments also seem to be stabilising globally, even in the face of higher or longer interest rates.
Meanwhile, ActivTrades trader, Dyogenes Rodrigues Diniz said the US dollar slipped 0.17 per cent against the ringgit yesterday and the downward movement was a natural reaction after the extensive upward movement that had been going on since April 14.
“From a technical point of view, the US dollar was in an overbought region against the ringgit, marked by the reading of 73.12 on the Relative Strength Index (RSI) indicator. Readings above 70 tend to show exhaustion of buying power.
“As the price managed to break below yesterday’s low, it is possible that the US dollar will drop to the region of 4.6000-4.5250 in a few days,” he added.
In the meantime, the ringgit was traded mostly higher against a basket of major currencies.
It rose vis-a-vis the euro to 5.1013/1073 from 5.1043/1092 at Tuesday’s close and strengthened against the Japanese yen to 3.2367/2408 from 3.2425/2458 yesterday, but eased versus the British pound to 5.9344/9414 from 5.9326/9383 previously.
The local note was also traded mostly higher against other Asean currencies.
The ringgit went up against the Singapore dollar to 3.4512/4558 versus 3.4553/4592 on Tuesday and advanced against the Thai baht to 13.1777/1989 from 13.2155/2342 yesterday.
It had also gained versus the Indonesian rupiah at 310.5/311.1 from 311.0/311.5 but slipped to 8.45/8.46 against the Philippines’ peso from 8.43/8.44 yesterday.
US dollar softens
The US dollar weakened on Tuesday as hawkish comments from European Central Bank (ECB) President Christine Lagarde strengthened expectations of more interest rate hikes in Europe, reported Xinhua.
The dollar index, which measures the greenback against six major peers, decreased 0.20 per cent to 102.4918 in late trading.
Inflation in the euro area is too high and is set to remain so for too long, said Lagarde at a central bank meeting in Portugal on Tuesday.
Meanwhile, the US consumer confidence index increased in June with consumers’ inflation expectations hitting the lowest level since December 2020.
The Conference Board reported Tuesday that its consumer confidence index rose to 109.7 in June from 102.5 in May. That’s the highest the reading has been since January 2022 and much higher than economists had forecast. A reading under 80 often signals a recession in the coming year. Consumers’ 12-month inflation expectations dipped to 6.0 per cent in June, the lowest reading since December 2020, from 6.1 per cent in May.
Moreover, the Federal Housing Finance Agency report showed monthly house prices rising 0.7 per cent in April after gaining 0.5 per cent in March. Prices increased 3.1 per cent in the 12 months through April after advancing 3.7 per cent in March.
“Strength in housing suggests risks for the Fed’s goal of a return to 2 percent inflation over the medium term,” said Veronica Clark, an economist at Citigroup in New York. “Housing strength over the summer also supports our base case of further rate hikes sooner rather than later.”
In late New York trading, the euro rose to US$1.0960 from 1.0915 dollars in the previous session, and the British pound was up to US$1.2751 from US$1.2721 in the previous session.
The US dollar bought 144.0130 Japanese yen, higher than 143.4470 Japanese yen of the previous session. The US dollar decreased to 0.8931 Swiss francs from 0.8949 Swiss francs, and it rose to 1.3182 Canadian dollars from 1.3145 Canadian dollars. The US dollar was down to 10.7178 Swedish Krona from 10.7211 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 RM46.94 billion in the conventional system and RM25.27 billion in Islamic funds.
Today, the central bank will conduct a RM1 billion conventional money market tender for seven days and two reverse repo tenders, comprising a RM1 billion tender for 30 days as well as a RM500 million tender for 93 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 RM47.4 billion conventional overnight tender and RM25.3 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD ————– 4.6570/6625
100 yen ———– 3.2367/2408
1 pound ———- 5.9344/9414
1 euro ———— 5.1013/1073
1 SGD ————— 3.4512/4558
100 baht ———- 13.1777/1989
1 mln rupiah —- 310.5/311.1
100 pesos ——– 8.45/8.46
Gold up
The physical price of gold as at 9.30 am stood at RM277.40 per gramme, down RM1.86 from RM279.26 at 5 pm yesterday. – BERNAMA
