KUALA LUMPUR, Sept 12 — The ringgit reversed its losses to close firmer against the US dollar today, mainly spurred by positive external developments with a high hope that the trade tension between the United States (US) and China will continue to de-escalate.
At 6pm, the ringgit rose to 4.1640/1680 against the US dollar from 4.1780/1810 yesterday.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said there had been positive developments of the trade war such as trade negotiation in October as well as tariff exemption on certain products announced by China.
He said the global foreign exchange (FX) market also reacted positively to the delay in the implementation of an additional 5.0 per cent tariff by the US government.
“This prompted a risk-on in the FX markets and ringgit has appreciated as a result,” he told Bernama.
Mohd Afzanizam said the next goal post to look is the Federal Open Market Committee (FOMC) meeting next week.
“If the Fed cut the rates, it could boost the value of ringgit,” he cited.
Bank Negara Malaysia (BNM) has maintained the Overnight Policy Rate (OPR) at 3.00 per cent at its Monetary Policy Committee (MPC) today, citing the global economy is expanding at a more modest pace amid slower growth in most major advanced and emerging economies.
The last MPC meeting for this year would be held on Nov 5 with many economists believed the central bank might keep the interest rate unchanged.
“We have seen inflation running at a very low rate while growth prospects are very challenging given the uncertainties of the trade war and UK Brexit.
“In that sense, the scope for monetary policy accommodation is widely open,” Mohd Afzanizam said.
Meanwhile, the ringgit was broadly higher against a basket of other major currencies.
It rose against the Singapore dollar to 3.0275/0308 from 3.0295/0328 on Wednesday’s close and strengthened versus the Japanese yen to 3.8602/8650 from 3.8786/8824.
The local currency appreciated against the British pound to 5.1355/1421 from yesterday’s 5.1648/1702 and increased vis-a-vis the euro to 4.5925/5973 from 4.6033/6079. — Bernama