Ringgit Opens Higher Against US Dollar for Fourth Day
The ringgit opened higher for the fourth consecutive day against the US dollar as investors reassessed their positions following the release of weaker US economic data, said an analyst.
Market Reaction
At 8 am, the ringgit traded at 4.4900/5050 against the greenback versus 4.5005/5050 at Thursday’s close.
Economic Data
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that at the current juncture, the market is still mixed as prospects for an elevated level of inflation are visible, with measures to be introduced by the incoming United States (US) administration are seen to be inflationary.
US Economic Data
The US Dollar Index continues to slide to 108.957 points while the 10-year US Treasury yield fell four basis points to 4.61 per cent, suggesting that the market participants expect the US Federal Reserve (Fed) to maintain their monetary easing bias as planned.
Jobless Claims
Mohd Afzanizam noted that initial jobless claims were higher than market expectation at 217,000 last week against the consensus target of 210,000.
Tax Cut Measures
Mohd Afzanizam noted that Treasury Secretary nominee Scott Bessent is in favour of making the 2017 tax cut measures permanent, and therefore, it might lead to strong demand. As such, the ringgit would continue to exhibit a tight range in the near term.
Global Uncertainties
SPI Asset Management managing partner Stephen Innes said the release of softer inflation data from the United Kingdom and the US has provided a respite, underscoring that market fears may have been initially overstated.
Inflationary Pressures
He noted that the latest consumer price index figures from these countries have reinforced the view that underlying inflationary pressures are easing. This could encourage both the Bank of England and the Fed to continue their rate-cutting agendas this year.
Yen’s Rise
Innes noted that the strengthening Japanese yen has primarily been fueled by escalating expectations of a Bank of Japan rate hike, potentially as early as next week.
Ringgit Performance
The ringgit opened higher against major currencies. It strengthened versus the euro to 4.6247/6402 from yesterday’s close of 4.6283/6329 and rose vis-a-vis the Japanese yen to 2.8889/8990 from 2.8914/8945, but it weakened against the British pound to 5.4926/5110 from Thursday’s close of 5.4888/4943.
ASEAN Currencies
The local note traded higher against ASEAN currencies, advancing versus the Singapore dollar to 3.2841/2955 from 3.2906/2941 at Thursday’s close and higher vis-a-vis the Philippine peso at 7.66/7.69 from 7.68/7.69 recorded at yesterday’s close.
Conclusion
The ringgit’s performance is a reflection of the market’s reaction to the release of weaker US economic data and the potential implications on global economic trends.
Frequently Asked Questions
Q: Why did the ringgit open higher against the US dollar?
A: The ringgit opened higher against the US dollar as investors reassessed their positions following the release of weaker US economic data.
Q: What is the current market sentiment?
A: The market is still mixed, with prospects for an elevated level of inflation visible, but measures to be introduced by the incoming US administration are seen to be inflationary.
Q: What is the impact of the US economic data on the ringgit?
A: The release of weaker US economic data has led to a decline in the US Dollar Index, suggesting that the market participants expect the US Federal Reserve to maintain their monetary easing bias as planned.