Ringgit weakens amid bearish risk sentiment

KUALA LUMPUR: The ringgit fell further against the US dollar amid bearish local risk sentiment as investors digested the United States (US) inflation data for January, which pointed to the possibility of a longer string of interest rate hikes.

At 6 pm, the ringgit eased to 4.3900/3945 versus the greenback from Tuesday’s closing level of 4.3455/3495.

SPI Asset Management managing director Stephen Innes said the market was pricing in an extra 25-basis point hike for June, hinting that traders thought that US inflation would not fall in a tidy fashion.

‘’Hence higher yields and shaky local risk sentiment were weighing on the ringgit today.

‘’And with China’s economy still not yet firing on all cylinders, there has been a subtle reappraisal of China’s reopening trade from a local perspective, with investors thinking there might not be a huge bounce in the second quarter as many had expected,’’ he told Bernama.

Innes said higher US yields also made local assets, which are perceived as risky by foreign investors, looked very unattractive today.

‘’So, there has likely been less international demand to buy local assets,’’ he said, adding that the markets were also closely monitoring the strength of US retail sales and industrial production data -- to be released tonight -- for further clues on the Federal Reserve (Fed) monetary policy’s future path.

‘’A June Fed hike has gone from zero per cent chance to even odds in the past two weeks,’’ he noted.

At home, the ringgit also was mostly lower against a basket of major currencies, except the Japanese yen.

It depreciated against the Singapore dollar to 3.2926/2962 from 3.2764/2799 at Tuesday’s close, fell versus the British pound to 5.3093/3147 from 5.2963/3012 yesterday, and slipped vis-a-vis the euro to 4.7083/7131 from 4.6762/6805 previously.

However, it strengthened versus the Japanese yen to 3.2909/2947 from 3.2918/2951 yesterday. - Bernama