Ringgit turns soft against US$ as volatility rises

KUALA LUMPUR: The ringgit traded lower against the US dollar in early trade on Monday amid the ongoing Middle East tension that has kept crude oil prices elevated, resulting in further challenges for central banks to meet their inflation goal this year that would result in a higher for longer interest rate environment, especially in the United States.

At 9.01 am, the ringgit weakened to 4.7840/7900 against the greenback from Friday’s closing of 4.7810/7855.

According to Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid, the ringgit is likely to stay weak in the near term as the US Federal Reserve (Fed) seems to be not in a hurry to ease its monetary policy stance any time soon. He said the market will be awaiting the Fed's favourite inflation gauge on Friday.

The US headline Personal Consumption Expenditure (PCE) price index is expected to increase slightly to 2.6 per cent in March from 2.5 per cent while the core PCE is anticipated to moderate to 2.6 per cent from 2.8 per cent.

"Fed officials have been signalling the need to keep the interest rate at the current level to bring the inflation rate towards its 2.0 per cent target. That journey is likely to be dollar-positive in the near term,” he told Bernama.

The ringgit was traded mostly higher against a basket of major currencies, except versus the euro, where it eased to 5.0974/1037 from 5.0961/1009 at Friday’s close.

The local unit expanded vis-a-vis the Japanese yen to 3.0932/0971 from 3.0947/0978 and appreciated versus the British pound to 5.9207/9281 from 5.9533/9589 previously.

It traded mixed against Asean currencies.

It edged up versus the Thai baht to 12.9420/9631 compared with 12.9668/9847 at Friday’s close and climbed against the Singapore dollar to 3.5107/5153 from 3.5113/5149.

The ringgit was unchanged versus the Philippine peso at 8.30/8.32 and went down vis-a-vis the Indonesian rupiah to 294.1/294.7 from 293.9/294.4 previously. - Bernama

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