Ringgit opens slightly lower against US$ as Fed leaves rate unchanged

KUALA LUMPUR: The ringgit opened a tad lower against the US dollar today after the US Federal Reserve (Fed) kept its benchmark interest rate unchanged.

At 9 am, the ringgit opened at 4.7705/7775 against the greenback from Tuesday’s close of 4.7700/7750.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the Fed’s two-day Federal Open Market Committee (FOMC) meeting concluded on Wednesday with the Fed keeping the interest rate steady at 5.50 per cent due to a lack of progress towards achieving its two per cent inflation target.

"At the same time, the option to raise interest rates was not on the table, with the Fed emphasising the need to assess incoming data before any decision can be made. In that sense, the higher for longer (interest rate narrative) still holds but the downward bias on rates is intact,” he told Bernama.

He said that it is more a question of when the Fed will start to ease the monetary policy stance.

"Consequently, the two-year note yield, which is sensitive to the Fed Funds Rate, fell seven basis points to 4.96 per cent while the US Dollar Index dropped 0.44 per cent to 105.755 points,” he noted.

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

The ringgit rose vis-a-vis the British pound to 5.9755/9843 from 5.9835/9898 previously and rebounded against the euro to 5.1097/1172 from 5.1163/1217. However, it fell versus the Japanese yen to 3.0572/0621 from 3.0396/0430 at Tuesday’s close.

At the same time, the local note traded easier against Asean currencies.

It depreciated further versus the Thai baht to 12.8800/9038 from 12.8689/8869 on Tuesday and was almost unchanged vis-a-vis the Indonesian rupiah at 293.3/293.9 from Tuesday’s 293.3/293.8 previously.

It weakened against the Philippine peso to 8.26/8.28 from 8.25/8.27 last week and fell versus the Singapore dollar to 3.5049/5103 from 3.5045/5084 from 3.5039/5081. - Bernama