KUALA LUMPUR: The ringgit strengthened against the US dollar in early trade on Thursday on the back of improved buying sentiment towards the domestic currency, said an analyst.
At 8.04 am, the ringgit advanced to 4.4400/4550 against the greenback compared with Wednesday’s close of 4.4505/4550.
SPI Asset Management managing partner Stephen Innes said that as tensions in South Korea eased and the US bond yields continued their descent, the market should see a much-needed relief sweep through Asian markets.
He added that the two-year US Treasury yield had dipped to 4.12 per cent, the lowest since the presidential election on Nov 5, marking a significant shift from the robust "Trump trade.”
The combination of lower yields and a weakening US dollar was stirring a festive mood in financial markets, offering a respite, especially after the recent upheavals in South Korea, he added.
"While we can expect the ringgit to open on a stronger note today, the extent of this rally in the ASEAN foreign exchange market will hinge mainly on whether we see a continued lull in the US President-elect's social media activity,” Innes told Bernama.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US Federal Reserve (Fed) was likely to remain on track to cut the interest rate by 25 basis points in the upcoming Federal Open Market Committee (FOMC) meeting.
However, he added, it remained to be seen whether such trend could help bolster the value of emerging currencies including the ringgit.
"It seems that the uncertainties in the political situations in France and South Korea may have led to cautious sentiment which would translate into more demand for the US dollar, not to mention Trump policies on tariffs and whether it would accelerate a persistent war on trade, especially with major economies, next year and beyond,” he said to Bernama.
The ringgit traded higher against a basket of major currencies.
It advanced against the British pound to 5.6370/6561 from 5.6415/6472 on Wednesday, improved versus the euro to 4.6660/6818 from 4.6735/6782 yesterday, and edged up vis-a-vis the Japanese yen to 2.9500/9601 from 2.9546/9580 previously.
The local note also performed better against ASEAN currencies.
It inched up against the Singapore dollar to 3.3031/3147 from Wednesday’s close of 3.3057/3093 and firmed versus the Philippine peso to 7.62/7.65 from 7.64/7.65
The local unit also improved vis-a-vis the Thai baht to 12.9510/13.0088 from 12.9563/9751 yesterday and appreciated versus the Indonesian rupiah to 278.5/279.6 from 279.2/279.6 previously. - Bernama
