KUALA LUMPUR: The ringgit extended its downtrend against the US dollar on Thursday despite a falling US Dollar Index as investors remained confident about the US interest rates cut soon, said an analyst.
At 6 pm, the ringgit depreciated to 4.7020/7055 versus the greenback from Tuesday’s close of 4.6950/6985.
The market was closed on Wednesday for the Wesak Day public holiday.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that, as expected, the ringgit was weaker against the greenback after the release of the Federal Open Market Committee minutes last night.
"It looks like the option for a rate hike is not entirely off the table, especially if the upside risk to inflation materialises.
"Clearly, the United States Federal Reserve is not yet declaring victory in its quest to bring down inflation towards the two per cent target and appears willing to sacrifice growth in order to reach its inflation objective,” he told Bernama.
He said that in the meantime, emerging currencies would likely remain volatile.
"In the United Kingdom, the inflation rate has come down quite significantly to 2.3 per cent in April but still above the two per cent target.
"The core inflation was also sticky as it remained on the high side at 3.9 per cent. As such, it remains to be seen whether the Bank of England would opt for monetary easing in the near term,” he added.
At the close, the ringgit was traded mostly higher against a basket of major currencies.
The local unit appreciated versus the Japanese yen at 3.0012/0036 from Tuesday’s closing of 3.0071/0095 and rose against the euro to 5.0993/1031 from 5.1044/1082 but slid vis-a-vis the British pound to 5.9824/9868 from 5.9730/9774 previously.
The local note traded mixed against ASEAN currencies, as it decreased against the Philippine peso to 8.09/8.10 from 8.06/8.07, as well as versus the Indonesian rupiah to 294.0/294.2 from 293.4/293.8 previously.
However, it improved against the Singapore dollar to 3.4843/4874 from 3.4863/489 at Tuesday’s close and gained versus the Thai baht to 12.8688/8833 from 12.9264/9407 previously. - Bernama
