KUALA LUMPUR: The ringgit rose against the US dollar following the unexpected move by Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) to increase the Overnight Policy Rate (OPR) by 25 basis points to 3.00 per cent.
At 6 pm, the local note rose to 4.4525/4580 versus the greenback from Tuesday’s closing rate of 4.4640/4640.
Bank Muamalat Malaysia Bhd chief economist and social finance Mohd Afzanizam Abdul Rashid said that judging from BNM’s statement, it appears that the OPR at 3.00 per cent is a done deal for the year.
"We view this positively as the OPR has been normalised, and the central bank has further policy space to respond to economic shocks in the future,” he told Bernama.
The central bank said that at that level, the benchmark interest rate has been brought back to pre-crisis levels and is more aligned with the stronger state of the economy.
"It is important to ensure that our OPR is at the right level to prevent problems that can arise from long periods of low-interest rates, such as too much borrowing. We will ensure that our OPR supports sustainable growth while keeping inflation in check,” according to BNM’s monetary policy statement snapshot for May 2023 released today.
Investors are now looking to the Federal Open Market Committee’s announcement later today, where there are expectations of an interest rate hike of 25 basis points.
Mohd Afzanizam said a dovish Fed would lift the ringgit’s value in the near term.
Meanwhile, the ringgit was traded lower against other major currencies.
It depreciated against the Japanese yen to 3.2833/2876 from yesterday’s 3.2388/2402, easier vis-a-vis the British pound at 5.5727/5796 from 5.5632/5636 and fell against the euro to 4.9156/9216 from 4.8902/8906 on Tuesday.
The local note traded mixed against Asean currencies.
It improved against the Philippines’ peso at 8.04/8.05 from 8.05/8.07 previously, unchanged against the Indonesian rupiah at 303.3/303.5, was lower against the Singapore dollar to 3.3420/3463 from 3.3411/3414 and fell versus the Thai baht at 13.0817/1037 from 13.0423/0478 previously. - Bernama
