Ringgit rallies against US dollar after Fed signals a more dovish stance going forward

KUALA LUMPUR: The ringgit jumped against the US dollar today as its winning streak continued for the fourth consecutive day after the US Federal Reserve (Fed) signalled a more dovish monetary stance going forward.

At 6 pm, the local note bounced to 4.4160/4200 versus the greenback compared with yesterday’s closing rate of 4.4530/4580.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said should the US dollar fall through the present support level of RM4.4099, the next defensive line is seen at RM4.3297.

The Fed hiked interest rates by 25 basis points on Wednesday but signalled in a statement that it is nearing the end of rate hikes.

Mohd Afzanizam noted that the Fed statement made a mention of the tighter liquidity condition which will affect households and businesses.

"It acknowledges the extent of the stress in the US banking system and how it can impact households and businesses as liquidity conditions become increasingly tighter.

"I suppose talk of a possible looser monetary policy stance by the Fed would gain more steam going forward,” he told Bernama.

"While the Fed has maintained its narrative on (fighting) inflation, the futures market for the Fed funds rates (FFR) seems to be not buying it. It appears that the Fed might cut the FFR as early as June,” he added.

The US Dollar Index (DXY) fell further to 101.98 points from yesterday’s closing of 102.346 and all major currencies appreciated against the US dollar.

Meanwhile, the ringgit was traded mostly lower against a basket of major currencies.

The local note edged down vis-a-vis the euro to 4.8055/8098 from 4.8026/8080 at yesterday’s close and fell against the Japanese yen to 3.3679/3712 from 3.3592/3633.

However, it appreciated versus the British pound to 5.4379/4428 from 5.4696/4758 previously.

At the same time, the ringgit was traded mostly higher against Asean currencies.

The local currency firmed against the Indonesian rupiah to 287.70/288.10 from 290.10/290.60 on Wednesday, strengthened versus the Singapore dollar to 3.3278/3313 from 3.3363/3406 and rose versus the Philippine peso to 8.13/8.14 from 8.16/8.18 previously.

However, the local note dropped against the Thai baht to 12.9562/9741 from 12.9297/9506 previously. - Bernama

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