Ringgit opens lower in face of US dollar strength

Weakness in the ringgit was expected as buying is broadly tilted towards a safe haven currency like the US dollar. — Reuters pic
Weakness in the ringgit was expected as buying is broadly tilted towards a safe haven currency like the US dollar. — Reuters pic

KUALA LUMPUR, Nov 9 — The ringgit retreated from yesterday’s gains to open lower this morning against the US dollar, as the stronger greenback curbed demand for the local unit, dealers said.

At 9am, the ringgit stood at 4.1735/1765 versus the greenback from 4.1620/1670 recorded at 6pm yesterday.

The US dollar recovered from its post-midterm election slide and strengthened after the country’s Federal Reserve kept its monetary policy unchanged, but signalled further gradual rate hikes in the future.

“This boosted risk appetite for the safe-haven currency, putting emerging currencies under pressure,” a dealer told Bernama.

On the local front, Bank Negara Malaysia yesterday kept the overnight policy rate (OPR) unchanged at 3.25 per cent for the fifth consecutive Monetary Policy Committee meeting, since raising it 25 basis points in January this year.

OANDA head of trading Asia-Pacific Stephen Innes said BNM held onto a neutral policy, but the language was tinged with a dovish bias that supports the market’s growing suspicions of a rate cut in the second half of 2019, if not a little sooner.

“On that basis alone, it would suggest the ringgit had further weakened, more so with credit rating agencies peering over the market’s shoulder,” he added.

Meanwhile, Alliance DBS Research believed that the central bank would keep the OPR steady at the current rate, at least until mid-2019, as there is no rush to implement any rate changes in the meantime.

“However, there may be a possible review of a rate cut of 25 basis points to spur economic activity, if the gross domestic product growth falls below four per cent in upcoming quarters,” it said in a note.

Against other major currencies, the ringgit traded mostly higher except for the Japanese yen where the local currency eased to 3.6626/6655 from 3.6605/6659 yesterday.

The ringgit rose against the Singapore dollar to 3.0337/0364 from 3.0344/0385 and strengthened versus the British pound to 5.4510/4553 from 5.4589/4659 and appreciated vis-a-vis the euro at 4.7436/7474 from 4.7534/7600. — Bernama

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