Ringgit extends gains on US$ as risk appetite grows

KUALA LUMPUR: The ringgit extended yesterday’s gains against the US dollar as the greenback -- a safe haven currency -- retreated amid risk-on mode.

At 9 am, the local note appreciated to 4.1755/1775 from 4.1800/1825 at Thursday’s close.

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the risk-on mode appears to be building its momentum today, which could be constructive for ringgit.

"The recent United States (US) Federal Open Market Committee (FOMC) meeting looks like a vindication that the global economic recovery story is on track, which warrants for a possible removal of excessive monetary policy accommodation,” he told Bernama.

On another note, he said China’s Evergrande Group’s debt default fiasco also seemed to be contained, given the liquidity injection by the monetary authorities.

Against such a backdrop, the ringgit could be poised for further appreciation today.

Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz commented that the US dollar’s downward move was triggered by the release of the US’ Initial Jobless Claims data which came in above expectations at 351,000, which took a toll on the greenback.

Additionally, the services Purchasing Managers' Index, which measures the confidence in the economy in the services sector, came in below expectations.

"Both numbers made investors bet on the dollar's fall in anticipation that the tapering process will extend to December, and this caused the dollar to devalue against its counterparts and against the ringgit,” he added.

At the opening, the ringgit was traded mixed against a basket of major currencies.

The ringgit decreased versus the British pound to 5.7350/7378 from 5.7157/7192 at Thursday’s close, and slipped to 4.9045/9069 versus the euro from 4.8998/9027 yesterday.

The local note rose vis-a-vis the Singapore dollar to 3.0962/0981 from 3.1002/1025 and increased against the yen to 3.7828/7850 from 3.8017/8040 previously. - Bernama
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