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 Monday as investors looked ahead to a key US inflation report, Xinhua reported.
The dollar index, which measures the greenback against six major peers, fell 0.30 per cent to 101.9780 in late trading.
Markets are eagerly awaiting key US inflation prints later this week, with the core consumer price index (CPI) remaining persistently high to date.
Market analysts note that a potential increase to the benchmark Fed funds rate at the July policy meeting of the Federal Open Market Committee (FOMC) has already been baked into the prices.
Several US central bank officials suggested on Monday that the Fed is close to ending the rate hiking cycle. “We still have a bit of work to do,” Fed Vice Chair for Supervision Michael Barr said on Monday. “I’ll just say for myself, I think we’re close.”
The yield of US two-year Treasury notes dropped by more than 10 basis points to around 4.85 per cent on Monday.
Separately, the US wholesale inventories were flat in May as firms stuck to more relaxed restocking strategies amid an uncertain demand environment, according to data from the Commerce Department published Monday.
The French economy is set to grow 0.1 per cent in the April-June period from the previous quarter, when it expanded 0.2 per cent, the Bank of France said on Monday in its monthly business climate report.
In late New York trading, the euro rose to US$1.0999 from US$1.0967 in the previous session, and the British pound increased to US$1.2856 from US$1.2838in the previous session.
The US dollar bought 141.3010 Japanese yen, lower than 142.1470 Japanese yen of the previous session, falling to a three-week low. The US dollar decreased to 0.8854 Swiss francs from 0.8887 Swiss francs, and it increased to 1.3279 Canadian dollars from 1.3272 Canadian dollars. The US dollar fell to 10.7647 Swedish Krona from 10.8309 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 RM49.02 billion in the conventional system and RM27.05 billion in Islamic funds.
Today, the central bank will call for two reverse repo tenders, comprising 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 RM50.2 billion conventional overnight tender and RM27.1 billion Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6605/6650
100 yen 3.2985/3020
1 pound 5.9981/6.0039
1 euro 5.1307/1357
1 SGD 3.4692/4728
100 baht 13.3214/3400
1 mln rupees 306.4/306.9
100 pesos 8.39/8.40
Gold up
The physical price of gold as at 9.30 am stood at RM279.47 per gramme, unchanged from RM279.47 at 5 pm yesterday. – BERNAMA
