Ringgit retreats vs US$ as inflation worries continue

KUALA LUMPUR: The ringgit failed to sustain earlier gains to end the day in bearish mode against the greenback as the mood turned sour with key US data and inflation figures from major economies back in focus.

At 6 pm, the local note was traded at 4.4250/4300 against the greenback compared with 4.4220/4265 at the close last Friday.

Bank Islam Bhd’s economist Firdaos Rosli said recent declines in US inflation are still deemed insufficient for the Federal Reserve to pivot.

"Personal Consumption Expenditures Price Index (seasonally adjusted) and the Consumer Price Index (CPI), on a year-on-year basis, remain elevated despite aggressive tightening by the central bank,” he told Bernama.

This week, the US will release its December Conference Board Consumer Confidence, Personal Consumption Expenditure Price Index and Dec 17 week Initial Jobless Claims, followed by inflation figures from Malaysia, Singapore and Japan, while China will also be announcing its December Loan Prime Rate.

Firdaos said a hawkish remark set by the US Fed chairman Jerome Powell during last week's central bank meeting had led all major central banks to decide to leave the "75 basis points club”.

Both the European Central Bank and the Bank of England raised their respective policy rates by 50 basis points in their December meetings.

"However, we are mindful of the surging COVID-19 cases in China as this might disrupt global economic activities.

"Hence we foresee the ringgit trading between RM4.42 and RM4.43 this week,” he added.

The ringgit was also traded lower against a basket of major currencies.

The local note fell against the British pound to 5.4043/4104 from 5.3705/3760 at Friday’s close and was marginally lower versus the Singapore dollar to 3.2633/2674 from 3.2531/2569 last week.

It slipped against the Japanese yen to 3.2515/2554 from 3.2230/2265 last Friday and weakened versus the euro to 4.7016/7069 from 4.6926/6974 previously. - Bernama