Ringgit opens lower against greenback on positive US economic data

KUALA LUMPUR: The ringgit extended its downtrend against the US dollar to open lower today as the greenback strengthened amidst positive US economic data, an analyst said.

At 9 am, the local note weakened to 4.2185/2220 versus the greenback from 4.2180/2210 at yesterday's close.

According to reports, the US weekly initial jobless claims declined to 166,000 last week from 171,000 in the preceding period.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the data suggest that the US labour market is improving following lower claims for state unemployment benefits among Americans.

"The US dollar continues to charge higher as Federal Reserve (Fed) officials remained consistent in their monetary tightening stand.

"This has resulted in higher US Treasury yields with the 10-year note yielded five basis points higher to 2.66 per cent, leading to a steeper yield curve as the long-term rates rose more than the short-dated securities," he told Bernama.

Mohd Afzanizam added that the benchmark equities were higher as well, signalling better risk appetite among investors.

It was reported that St. Louis Fed President James Bullard prefers the Fed Fund Rate to be between 3.0 per cent to 3.25 per cent by the second half of 2022, while Chicago Fed President Charles Evan favours raising the interest rate to the neutral level.

As such, the US Dollar Index (DXY) has risen by 0.15 per cent to 99.751 points, a sign that market participants are still long on the safe-haven currencies.

Hence, Mohd Afzanizam said the ringgit should stay within the range of RM4.21 to RM4.22 today.

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

It rose against the Singapore dollar to 3.0964/0992 from 3.0996/1021 at yesterday's close and strengthened vis-a-vis the euro to 4.5813/5851 from 4.5942/5975.

The local unit improved against the British pound to 5.5127/5173 from 5.5188/5228 on Thursday and appreciated against the Japanese yen to 3.4070/4101 from 3.4093/4120. - Bernama