At 6pm, the local note improved to 4.3415/3505 against the greenback from Monday’s close of 4.3715/3765.
KUALA LUMPUR: The ringgit continued to be on a stronger footing against the US dollar yesterday after recent weakness as the markets anticipate a rate cut by the US Federal Reserve (Fed), says an economist.
At 6pm, the local note improved to 4.3415/3505 against the greenback from Monday’s close of 4.3715/3765.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said Bank Negara is widely expected to keep the overnight policy rate unchanged, providing further support for the ringgit.
“Ultimately, the gap between the two rates will make the ringgit look more appealing at the current juncture,” he told Bernama. Markets are pricing in a 25-basis point interest rate cut at the Fed’s November meeting, set for today and tomorrow.
Bank Negara’s Monetary Policy Committee or MPC meeting is scheduled for yesterday and today.
Meanwhile, SPI Asset Management managing director Stephen Innes said the markets seem to be bracing for a political gridlock, prompting investors to ease off the Donald Trump trade – and nowhere is this more obvious than in the overbought US dollar-ringgit pairing.
He said the pair has seen some notable trimming as traders hedge their bets.
“Should we land in a political gridlock – a president without Congress’ backing – the stage for sweeping policy changes shrinks considerably, especially in the foreign exchange world.
“This might just be why we’re seeing a rally in the ringgit. With a gridlocked Congress, bold economic overhauls are likely off the table, giving the ringgit some short-term breathing room,” he added.
Innes said that while the ringgit’s rally is making headlines, it’s important to keep the broader context in mind – it’s still a cautious move, with context being the key.
“In the near term, the ringgit’s direction will largely depend on the outcome of the US election, suggesting that today could be a pivotal day,” he said. At the close, it was higher against a basket of currencies.
