Ringgit Opens Flat vs. US Dollar Amid Cautious Economic Sentiment
The Market Performance
The ringgit opened nearly flat against the US dollar on Tuesday, as cautious sentiment surrounding the current economic outlook saw some investors turn to safe-haven assets, according to an economist.
A Mixed Bag for the Ringgit
At 8:10 am, the local currency stood at 4.3045/3200 against the greenback, compared to yesterday’s close of 4.3045/3100.
Federal Reserve on Interest Rates
Bank Muamalat Malaysia Bhd, chief economist, Dr. Mohd Afzanizam Abdul Rashid, said the greenback strengthened as the US Federal Reserve (Fed) is expected to take a gradual approach in easing monetary policy.
Oil Prices and the Ringgit
“Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, hinted that interest rate cuts would likely proceed at a slower pace in the coming quarters as the Fed moves towards the neutral rate. Meanwhile, ongoing tensions in the Middle East have kept crude oil prices elevated,” he said.
Economic Performance and Outlook
As a result, the US Dollar Index (DXY) rose to a high of 104.012 points, indicating strong demand for the greenback. Despite expectations of the ringgit trading sideways amid current demand for the US dollar, Afzanizam said Malaysia’s positive growth outlook, coupled with its commitment to fiscal consolidation, provides a strong case for a firmer ringgit in the future.
Malaysia’s Economic Prospects
Malaysia’s advance gross domestic product estimate for the third quarter, which came in at 5.3 per cent, suggests the country is on track for robust growth this year and potentially into the next.
Ringgit’s Performance Against Other Currencies
In early trade, the ringgit was higher against a basket of major currencies. It edged up against the Japanese yen to 2.8579/8685 from 2.8685/8724 on Monday and increased vis-a-vis the British pound to 5.5890/6091 from 5.6040/6112.
ASEAN Currencies
The local currency also strengthened against the euro to 4.6553/6721 from 4.6687/6746 at Monday’s close. Meanwhile, the ringgit traded mixed versus ASEAN currencies. It appreciated against the Thai baht to 12.8397/12.8948 from 12.8719/8945, and strengthened against the Singapore dollar to 3.2692/2814 from 3.2776/2821. It was nearly flat against the Indonesian rupiah at 277.6/278.7 compared to 277.6/278.1 previously, and remained unchanged against the Philippine peso at 7.48/7.51 versus 7.48/7.49 at Monday’s close.
Conclusion
In conclusion, the ringgit’s performance against the US dollar was nearly flat, as the economic outlook remains cautious. However, Malaysia’s positive growth prospects and commitment to fiscal consolidation provide a strong case for a firmer ringgit in the future.
FAQs
* What is the current value of the ringgit against the US dollar?
The ringgit is currently trading at 4.3045/3200 against the greenback.
* What is the reason for the greenback’s strengthening?
The greenback is strengthening due to expectations of a gradual approach in easing monetary policy by the US Federal Reserve and the ongoing tensions in the Middle East, which have kept crude oil prices elevated.
* What is the outlook for the ringgit?
Malaysia’s positive growth outlook, coupled with its commitment to fiscal consolidation, provides a strong case for a firmer ringgit in the future.