Ringgit firmer against US$ in early trade

KUALA LUMPUR: The ringgit has strengthened against the US dollar in the early trade today, buoyed by expectations of a global interest rate cut which has been dampening sentiment towards the greenback, an analyst said.

At 9 am, the ringgit rose to 4.6900/6970 versus the US dollar from yesterday's close of 4.6985/7010.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) fell as the United States (US) Federal Reserve (Fed) chair Jerome Powell indicated that a rate cut would happen without needing to wait for the country’s inflation to be lower than 2.0 per cent.

"It seems like a risk-on mode as the US Fed is on track to reduce the Fed Fund Rate (FFR) in September," he told Bernama.

On the home front, he noted that investors will be keeping a close watch on Bank Negara Malaysia's (BNM) monetary policy committee meeting today for their decision on the overnight policy rate (OPR) which is expected to remain at 3.0 per cent.

"We believe the BNM will reiterate its stance on inflation, as the upside risk is very much visible due to the possible changes to fuel subsidies going forward.

"The prospect of lower interest rate differentials between the FFR and OPR will be the driving force for strong ringgit in the near term," he added.

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

The local note appreciated against the Japanese yen to 2.9024/9069 from Wednesday’s close of 2.9075/9092 and rose vis-a-vis the euro to 5.0816/0892 from 5.0828/0855 yesterday, but fell to 6.0285/0375 against the British pound from 6.0174/0206 previously.

Similarly, the ringgit traded mostly higher against its ASEAN peers.

It edged up versus the Singapore dollar to 3.4779/4834 from 3.4817/4838 yesterday and strengthened against the Indonesian rupiah to 288.7/289.3 from 289.2/289.6 previously.

However, the local unit eased to 12.9233/9465 against the Thai baht from 12.9062/9184 on Wednesday and remained unchanged vis-a-vis the Philippines’ peso at 8.05/8.07. - Bernama

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