KUALA LUMPUR: The ringgit opened almost flat against the greenback as the United States Federal Reserve (Fed) is anticipated to maintain its hawkish monetary policy stance.
At 9.05 am, the local note eased to 4.6835/6890 against the United States (US) dollar from Thursday’s close of 4.6825/6850.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid told Bernama that the consensus anticipate the United States Federal Reserve to maintain its hawkish stance in its monetary policies.
As such, he expects the ringgit to remain weak versus the US dollar.
Conversely, the ringgit was traded higher against a basket of major currencies.
It appreciated against the Japanese yen to 3.1759/1798 from 3.1769/1789 at the close on Thursday, rose against the British pound to 5.8132/8200 from 5.8405/8436 yesterday and edged up against the euro at 4.9842/9900 from 5.0234/0261 previously.
At the same time, the local note traded mixed against other Asian currencies.
It appreciated vis-à-vis the Singapore dollar to 3.4326/4369 from 3.4402/4423 at Thursday’s close and was up against the Philippines’ peso at 8.24/8.26 from 8.25/8.26 previously.
It was almost unchanged against the Indonesian rupiah at 304.9/305.5 from 304.9/305.2 yesterday and depreciated against the Thai baht to 13.0897/1109 from 13.0792/0902 previously.
US dollar rises after ECB rates hike
The US dollar advanced in late trading on Thursday, as the European Central Bank (ECB) announced a 10th consecutive hike in its main interest rate, reported Xinhua.
The dollar index, which measures the greenback against six major peers, increased 0.58 per cent to 105.3816 in late trading, hitting its highest level in six months.
The ECB’s rate rises have hauled its main deposit facility from -0.5 per cent in June 2022 to a record 4 per cent. The ECB move on Thursday also has taken the interest rates on its main refinancing operations and marginal lending facility 25 basis points higher, to 4.5 per cent and 4.75 per cent, respectively.
In a statement, the ECB indicated that further hikes may be off the table for now. “Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.”
“The Governing Council’s future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary,” it added.
The euro fell sharply after the announcement. In late New York trading, the euro was down to US$1.0636 from US$1.0732 in the previous session, and the British pound was down to US$1.2402 from US$1.2486.
During the week ending Sept 9, claims for state unemployment benefits rose by 3,000 to 220,000 in the United States, the US Bureau of Labor Statistics (BLS) said Thursday. The four-week moving average of claims fell 5,000 to 224,500 in the latest week, which was the lowest level since late February.
“Layoffs remain low and, for now, there is no sign that businesses are shedding workers in large numbers in response to restrictive monetary policy that is aimed at weakening demand and economic activity,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
Despite the US economic data, views for the Federal Reserve remained largely intact. Expectations that the US central bank will likely hold rates steady at its Sept 19-20 policy meeting are at 97 per cent, according to CME’s FedWatch Tool on Thursday.
In late New York trading, the US dollar bought 147.4410 Japanese yen, lower than 147.45 Japanese yen of the previous session. The US dollar increased to 0.8962 Swiss francs from 0.8934 Swiss francs, and it fell to 1.3509 Canadian dollars from 1.3564 Canadian dollars. The US dollar increased to 11.2022 Swedish krona from 11.1379 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 RM26.76 billion in the conventional system and RM19.46 billion in Islamic funds.
Today, the central bank will conduct two Qard tenders, comprising a RM400 million tender for seven days and a RM300 million tender for 14 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 91 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 RM28.8 billion conventional overnight tender and RM18.8 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6835/6890
100 yen 3.1759/1798
1 pound 5.8132/8200
1 euro 4.9842/9900
1 SGD 3.4326/4369
100 baht 13.0897/1109
1 mln rupiah 304.9/305.5
100 pesos 8.24/8.26
Gold up
The physical price of gold as at 9.30 am stood at RM278.36 per gramme, up 77 sen from RM277.59 at 5 pm yesterday. – BERNAMA
