Ringgit opens lower as bond yields rise

KUALA LUMPUR: The ringgit opened lower against the greenback as the latest set of strong US economic data strengthened the higher-for-longer scenario for American interest rates, spurring a jump in US bond yields, analysts said.

At 9 am, the local currency traded easier at at 4.7425/7475 against the greenback from Tuesday’s close of 4.7345/7375.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the better-than-expected US retail sales grew 0.7 per cent month-on-month in September against consensus estimates of 0.3 per cent. US industrial production also pointed to healthy growth with the capacity utilisation rate in the manufacturing sector rising to 79.7 per cent in September from 79.5 per cent previously.

"As such, the ringgit-US dollar pair is expected to linger around RM4.73 today with a focus on the conflict in the Middle East that will keep market participants remaining guarded,” Mohd Afzanizam told Bernama.

SPI Asset Management managing partner Stephen Innes said the update on US spending could be viewed as a hawkish development and contributed to the bearish sentiment in the US bond market.

"Contrary to expectations that the US consumer is weakening, recent revisions suggest Americans may still have significant savings. The US 10-year bond yields jumped 11 (basis) points, which is an ominous sign for the ringgit,” said Innes.

Aside from that, a broader escalation in the Middle East would drive more US dollar demand, he added.

The ringgit also traded lower versus a basket of major currencies.

It depreciated vis-à-vis the British pound to 5.7678/7739 from 5.7595/7632 at Tuesday’s close, weakened versus the euro to 5.0100/0153 from 4.9973/5.0004 and fell against the yen to 3.1663/1699 from 3.1629/1651 yesterday's close.

Similarly, the local note traded lower against other Asean currencies at the opening today.

The ringgit was down against the Thai baht to 13.0235/0426 from 13.0180/0319 at yesterday’s close and eased against the Indonesian rupiah at 301.7/302.2 from 301.2/301.5 previously.

It slipped against the Singapore dollar to 3.4632/4671 from 3.4566/4590 on Tuesday and slightly dropped vis-a-vis the Philippine peso to 8.36/8.38 versus 8.34/8.35 yesterday. - Bernama