Ringgit ends higher against US dollar in muted trading

KUALA LUMPUR: The ringgit ended higher against the US dollar after moving in a tight range today due to muted trading activities, said an analyst.

At 6 pm, the local note traded marginally better at 4.4190/4240 versus the greenback compared with last Friday’s closing rate of 4.4250/4305.

Bank Muamalat Malaysia Bhd chief economist and social finance Dr Mohd Afzanizam Abdul Rashid said this was because attention had shifted towards the banking sector in the United States (US) and Europe as central banks had slowed their interest rate hikes.

"The ringgit could have moved a lot higher since the US Federal Reserve (Fed) has slowed down its pace of rate hikes.

"It seems that the situation (banking crisis) is contained given the willingness of third parties to take over the affected banks,” he told Bernama.

However, Mohd Afzanizam said, markets were still assessing the severity of the prevailing condition.

It was reported last week that bank borrowings in the Fed discount window rose sharply to US$117 billion, higher from the previous week’s level of US$32 billion and surpassing the US$112 billion recorded during the subprime mortgage crisis.

The discount window is a central bank lending facility meant to help commercial banks manage short-term liquidity needs.

"I believe the risk-off mode is still quite visible at the moment. Perhaps markets are awaiting more clarity on how the issue could play out," he said.

Nonetheless, Mohd Afzanizam said, it was "quite compelling” to think that the Fed may need to review its next course of action, as it had delivered a rate hike of 475 basis points since last year.

"That is very steep and certainly it may have repercussions on economies as businesses may need to contend with higher borrowing costs.

"As for the ringgit-US dollar exchange rate, it should stick at the current trajectory given the heightened uncertainties," he added.

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

The local note fell vis-a-vis the euro to 4.7579/7633 from 4.7476/7535 at Friday’s close and eased against the British pound to 5.4159/4221 from 5.4034/4101 previously.

However, it appreciated versus the Japanese yen to 3.3612/3653 from 3.4099/4144 last week.

Against Asean currencies, the ringgit was traded higher.

It rose marginally against the Indonesian rupiah to 291.30/291.90 from 291.90/292.50 last Friday and strengthened versus the Singapore dollar to 3.3151/3191 from 3.3178/3225 previously.

The local currency ticked up against the Thai baht to 12.8236/8440 from 12.9610/9835 and improved vis-a-vis the Philippine peso to 8.14/8.15 from 8.15/8.16 previously. - Bernama

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