KUALA LUMPUR: The ringgit rose 0.35 per cent against the US dollar, in line with regional peers after the US Federal Reserve (US Fed), as expected, kept its interest rate steady yesterday.
At 9 am, the ringgit was at 4.1575/1605 against the greenback from 4.1720/1750 at Wednesday's close.
Ambank in its economic report today said, despite holding the rates, for now, the US Fed nevertheless is open to a possible rate cut later in the year.
"It is likely that US Fed would cut the rates as soon as July supported by three key factors inflation, growth and its economic outlook," it said.
Yesterday, following two-day policy meeting the US Fed announced it would hold the interest rates steady between 2.25 per cent and 2.5 per cent, but signalled that it was ready to cut rates if uncertainty and the economic outlook is on the gloomy side.
According to a dealer, investors’ sentiment has been on the rise with several multinationals planning to use Malaysia as its production base.
"This has boosted the ringgit for now. Coupled with stronger economic policies and incentives to attract foreign direct investment, the ringgit has a bright chance to trade higher against the US dollar this week," he said to Bernama.
It was reported that Apple Inc, an Americal technology giant is preparing to move its production capacity from China to Southeast Asia as part of the restructuring of its supply chain.
Meanwhile, the ringgit traded lower against a basket of major currencies.
The local currency weakened to 5.2705/2747 from 5.2459/2505 against the pound yesterday and fell against the Singapore dollar to 3.0543/0576 from 3.0508/0535 previously.
The ringgit was also lower against the yen at 3.8621/8659 from 3.8476/8515 while against the euro, the local currency slid to 4.6797/6847 from 4.6731/6781 yesterday. - Bernama
Ambank research said the US Federal Reserve's decision to leave the policy rate unchanged was expected.
"Despite cautious wording, we are betting the Fed rate cut could happen as soon as July, raised our probability to 90% from 60% previously for a July rate cut supported by three key factors," it said.
However, it noted that the key focus of the day is the Bank of Japan, which it expects to also maintain its monetary policy.
The research house also forecasts the Bank of England to maintain its interest rate decision given that inflation eased to its target of 2% in May.
"Thus, we expect MYR to trade between our support level of 4.1568 and 4.1644 while our resistance is pegged at 4.1781and 4.1844," it said.