KUALA LUMPUR: The ringgit opened marginally higher against the US dollar on Wednesday as global investors digest market news that sends mixed signals as to the US Federal Reserve’s (Fed) next course of action, said Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid.
At 9 am, the local note rose to 4.7200/4.7250 against the greenback from yesterday’s close of 4.7215/7255.
“The US Dollar Index (DXY) continued to head north as the Fed appears to be the outlier in respect to the pace of interest rate hike as other central banks seems to have reach their terminal rates,” he told Bernama.
Mohd Afzanizam also said that the sharp increase the 10-year US Treasury yield – up 12 basis points to 4.80 per cent – indicates that inflation premium remains elevated.
“As such, we expect the ringgit to maintain its weak bias,” he added.
Meanwhile, the ringgit was traded mostly higher versus a basket of major currencies.
The local currency rose against the euro to 4.9409/9461 from 4.9500/9542 on Tuesday and appreciated vis-a-vis the British pound to 5.6999/7059 from 5.7031/7079.
However, it fell further against the yen to 3.1635/1671 from 3.1504/1533 at yesterday.
The ringgit was also traded mixed against other Asian currencies.
It rose against the Singapore dollar to 3.4352/4394 from 3.4366/4400 on Tuesday, increased versus the Thai baht to 12.7224/7417 from 12.7381/7540 yesterday, and firmed vis-a-vis the Indonesian rupiah to 302.9/303.4 from 303.0/303.4 previously.
However, the local note was flat against the Philippine peso at 8.30/8.32 compared with Tuesday’s closing of 8.30/8.31.
US dollar index hits 10-month high
Gold futures on the COMEX division of the New York Mercantile Exchange fell on Monday on stronger US dollar, reported Xinhua.
The most active gold contract for December delivery fell US$18.90, or 1.01 per cent, to close at US$1,847.20 per ounce.
The US economy is still dealing with the aftermath of the COVID-19 pandemic, Federal Reserve Chair Jerome Powell said during a meeting with community and business leaders in York, Pennsylvania, on Monday.
In prepared remarks to a banking conference, Federal Reserve Governor Michelle Bowman said Monday: “I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2 per cent in a timely way.”
Economic data released on Monday were mixed. The Institute for Supply Management (ISM) manufacturing index came in higher than expected at 49 per cent in September, up from 47.6 per cent a month earlier.
The September S&P Global U.S. Manufacturing Purchasing Managers’ Index (PMI) rose to 49.8 from 47.9 in August. The September reading was higher than the expected reading of 48.9.
The US Commerce Department reported that US spending on construction projects rose 0.5 per cent in August to US$1.98 trillion. Economists were expecting construction spending to rise 0.6 per cent in August.
Silver for December delivery fell US$1.029, or 4.58 per cent, to close at US$21.421 per ounce. Platinum for January delivery fell US$29.10 or 3.18 per cent, to close at U$886.80 per ounce.
Short-terms 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 RM39.31 billion in the conventional system and RM26.23 billion in Islamic funds.
Today, the central bank will conduct two conventional money market tenders, namely a RM1 billion tender for seven days and a RM500 million tender for 14 days.
It will also conduct reverse repo tenders of RM1.5 billion reverse repo tender for 33 days and RM500 million for 92 days.
BNM also announced the availability of reverse repo, sale and buy-back agreements and collateralised commodity Murabahah facilities for one-month and three-month tenors.
At 4 pm, it will conduct up to RM38.8 billion conventional overnight tender and RM26.2 billion for the Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.7200/7250
100 yen 3.1635/1671
1 pound 5.6999/7059
1 euro 4.9409/9461
1 SGD 3.4352/4394
100 baht 12.7224/7417
1 mln rupiah 302.9/303.4
100 pesos 8.30/8.3232
Gold down
The physical price of gold as at 9.30 am stood at RM267.79 per gramme, down two sen from RM267.81 at 5 pm yesterday. – BERNAMA
