KUALA LUMPUR: The ringgit was easier against the US dollar in early trade today ahead of the United States (US) inflation data this week, said an analyst.
At 8.07 am, the local note depreciated to 4.3400/3565 versus the greenback from Friday’s close of 4.3275/3330.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the market would focus on key data points such as the US Consumer Price Index (CPI) and Producer Price Index (PPI) to assess the inflation, as well as Japan’s second quarter 2024 gross domestic product (GDP) and China’s CPI, trade and new loans.
"There is also possible mild profit-taking activity as the local note is overbought following recent gains.
"However, the ringgit remain positive as the potential rate cuts by the US Federal Reserve next week will reduce the gap between the Fed Fund Rate and the Overnight Policy Rate (OPR)," he told Bernama.
The US Fed would also share its latest macroeconomic projections, especially the infamous dot plots chart that would tell us the direction of the benchmark interest rate.
"The question now is whether the Federal Open Market Committee (FOMC) members would opt for a 25 or 50 basis point cut when they meet on Sept 17-18,” he said.
Meanwhile, UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan said the US dollar has shown a soft performance over the past few sessions, influenced by negative job market data, which has had a significant impact on the foreign exchange market.
Additionally, the ringgit is supported by the Chinese CPI year-on-year data, scheduled for release today, as it is expected to show an increase to 0.7 per cent from the previous 0.5 per cent, while the month-on-month measure is anticipated to remain steady at 0.5 per cent.
"Despite the higher real rates in China, which ideally should be very low or even negative given the current economic circumstances, Chinese officials have been slow in implementing the necessary support measures, although they continue to pledge more support.
"These factors collectively suggest a favourable environment for the ringgit to trade higher against the US dollar today,” he said.
The ringgit traded lower against a basket of major currencies.
It declined against the euro to 4.8126/8309 from 4.8087/8148 on Friday, edged lower against the British pound to 5.7019/7236 from 5.7010/7083 and slipped versus the Japanese yen to 3.0471/0589 from 3.0296/0337.
However, the ringgit traded mixed against ASEAN currencies.
It was down against the Indonesian rupiah to 282.1/283.4 from 281.3/281.9 and decreased against the Philippine peso to 7.76/7.79 from 7.74/7.75 on Friday's close.
It strengthened against the Singapore dollar to 3.3305/3437 from 3.3327/3372 and improved against the Thai baht to 12.8676/9273 from 12.9087/9305. - Bernama
