Ringgit ends higher against US dollar on rising oil prices

  • Forex
  • Wednesday, 07 Jun 2023

KUALA LUMPUR: The ringgit closed slightly higher against the US dollar today as higher oil prices continued to support risk appetite in the market, amid cautious sentiment in the greenback.

At 6 pm, the local note ended firmer at 4.5950/6000 versus the US dollar compared with Tuesday’s closing of 4.6055/6100.

At the time of writing, the benchmark Brent crude oil price rose 0.66 per cent to US$76.79 per barrel.

Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said the local market was mainly dominated by external factors, including the fate of the US dollar ahead of the United States (US) Federal Reserve's (Fed) policy meeting next week and China’s economy.

He said, while news of the US Secretary of State’s planned visit to China in the coming weeks would ease the tension between the two economic superpowers, slowing China’s economy indicates a guarded view over the global economic prospects this year.

Such a notion was based on the latest data on China’s exports, which fell more than expected at 7.5 per cent in May against consensus estimates of 0.4 per cent contraction, he said.

"We could see the US Dollar Index (DXY) remaining in positive territory today when the index rose by 0.02 per cent to 104.149 points, suggesting demand for the safe-haven currency is still in the lead.

"In a nutshell, market participants are wary about the global growth prospects as major central banks appear not to let up in their efforts to bring down inflation via monetary tightening.

Yesterday, the Reserve Bank of Australia unexpectedly raised their Cash Rate by 25 basis points (bps) to 4.10 per cent.

Mohd Afzanizam said perhaps next week, the US central bank would maintain its stand by raising the Fed Funds Rate by 25 bps.

Should that happen, then the Fed has been raising the policy rate by 525 bps within 16 months, which was less than during the previous interest rate hike cycle from June 2004 to June 2006 wherein a total of 425 bps was increased during the period, he added.

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

It rose to 3.2996/3034 against the Japanese yen from 3.3050/3085 at Tuesday’s closing, increased vis-a-vis the euro to 4.9176/9229 from 4.9237/9286 yesterday, but depreciated versus the British pound 5.7212/7275 from 5.7131/7187 previously.

Similarly, the local note was traded higher against other Asean currencies.

The ringgit advanced against the Singapore dollar to 3.4098/4137 from 3.4140/4179 on Tuesday, improved versus the Thai baht to 13.2303/2508 from 13.2357/2547, and expanded against the Indonesian rupiah to 308.8/309.2 from 309.8/310.3 yesterday.

The local currency however was unchanged against the Philippine peso at 8.19/8.20. - Bernama

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