Ringgit opens marginally higher against US dollar


KUALA LUMPUR: The ringgit opened marginally higher against the US dollar today in anticipation of a higher overnight policy rate (OPR) being set at the fourth Monetary Policy Committee (MPC) meeting next week to contain inflation, said an analyst.

At 9.00 am, the local currency rose to 4.3990/4020 against the greenback from Friday's close of 4.4010/4045.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit would remain in a tight range as market participants would also be weighing the possible outcome of the meeting.

"This is especially true when the prevailing inflation rate is at 2.8 per cent as of May.

"This gives us the impression that real interest rate is already in the negative region given the nominal OPR level of 2.00 per cent. As such, the case for higher OPR is building up," he told Bernama.

Meanwhile, Mohd Afzanizam said in light of the elevated levels of inflation along with aggressive monetary tightening by the Federal Reserve (Fed), possible signs of economic slowdown would emerge.

"Judging from last week’s testimony by Fed chairman Jerome Powell, we could see clearly the pushback from the Congressmen on how Fed tightening could affect the economy and their constituencies.

"In that regard, any signs of economic slowdown would persuade the Fed to rethink its strategy in order to project its ability to engineer a soft landing in the economy," he said.

He said the United States ISM Purchasing Managers Index (PMI) for June would be out on Friday with consensus pegging a reading of 55 points versus 56.1 points in the previous month.

"Also a gauge for US Consumer Confidence from The Conference Board will be announced this week. We have seen the index fall in May to 106.4 points from 108.6 points in April," he said.

However, the local currency was traded mixed against a basket of major currencies.

The ringgit appreciated against the British pound to 5.3985/4021 from Friday's close of 5.4128/4171 and rose against the euro to 4.6440/6472 from 4.6444/6481 previously.

It weakened versus the Singapore dollar to 3.1727/1754 from 3.1710/1740 and slipped vis-a-vis the Japanese yen to 3.2670/2697 from 3.2590/2621 last Friday. - Bernama

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