KUALA LUMPUR, June 23 ― The ringgit opened higher against the US dollar today despite the strengthening greenback, supported by the steady crude oil prices and the positive sentiment brought about by the reaffirmation of Malaysia’s sovereign rating.
The US dollar had extended its rebound from yesterday after its sharp corrective pullback on Monday.
At 9am, the local note rose to 4.1510/1555 versus the greenback from 4.1590/1620 at yesterday’s close.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said S&P Global Ratings’ (S&P) affirmation of Malaysia’s sovereign credit ratings indicated that the government’s finances are still in good condition, supported by the ringgit.
S&P has affirmed Malaysia’s foreign currency and local currency long-term issuer ratings at A- and A, respectively, with a negative outlook.
Mohd Afzanizam said Brent crude oil price which is hovering between US$74 (RM308.40) and US$75 per barrel also remained supportive of the local currency.
“On another note, the latest comment by the United States Federal Reserve (US Fed) chair, Jerome Powell has reassured market participants that the US central bank is in no hurry for the rates hike,” he said.
He noted that Powell’s remarks had boosted the equities market, resulting in the tech-heavy Nasdaq posting another record high as investors adopted a risk-on mode.
“Against such a backdrop, there could be a spillover to the US dollar versus ringgit pair (USD-MYR) which had weakened yesterday, and this should limit the extent of the ringgit depreciation against the greenback, possibly around RM4.14 to RM4.15,” he told Bernama.
Powell had reportedly said that the US economy continues to show “sustained improvement”, but that inflation remains a concern.
Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz opined that growing concerns about inflation in the US have become a reality.
Although the US Fed did not make any clear move, Powell’s speech made it clear that the interest rate for the US dollar is likely to increase before September 2023, he said.
“The market had priced that information in and pushed the dollar up to break the important resistance level of 4.1500 against the ringgit.
“Now there is no nearby resistance, so it could fluctuate until it reaches 4.1700 in the next few days,” he noted.
At the opening, the ringgit was mostly lower against a basket of major currencies, except the Japanese yen.
It weakened against the Singapore dollar to 3.0883/0919 versus 3.0874/0901 at yesterday’s close, slipped against the British pound to 5.7865/7928 from 5.7681/7723 and depreciated vis-a-vis the euro to 4.9530/9583 from 4.9426/9461 yesterday.
Conversely, the local note advanced against the Japanese yen to 3.7484/7528 from 3.7658/7689 previously. ― Bernama