KUALA LUMPUR: The ringgit opened lower against the US dollar on Thursday, as expectations dimmed for a near-term rate cut by the US Federal Reserve (Fed), an analyst said.
At 8 am, the local note declined to 4.2300/2650 against the greenback from Wednesday’s close of 4.2215/2275.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) rose 0.36 per cent to 99.875, after minutes from the Federal Open Market Committee (FOMC) signalled that rising stagflation risks could delay monetary easing this year.
"It appears the Fed is concerned about the risks posed by persistently high inflation, despite weak job growth prospects.
"The impression is that the Fed may be reluctant to cut the federal funds rate to support growth, presenting a policy dilemma, as it must also ensure that inflation remains under control,” he told Bernama.
Citing the recent FOMC minutes, Mohd Afzanizam said the risk of a US recession has increased, as uncertainties over trade policies and export restrictions could impede economic activity.
Hence, at the upcoming FOMC meeting in June, the Fed staff is expected to release a revised set of macroeconomic forecasts, with a downward adjustment from the March projections appearing likely, he added.
At the opening, however, the ringgit traded higher against a basket of major currencies.
It rose against the Japanese yen to 2.8998/9240 from Wednesday’s close of 2.9271/9315, gained vis-à-vis the euro to 4.7494/7887 from 4.7838/7906, and appreciated against the British pound to 5.6779/7249 from 5.7028/7109.
The local note, meanwhile, traded mixed against its ASEAN peers.
It strengthened against the Singapore dollar to 3.2674/2950 from 3.2776/2825 on Wednesday, and advanced against the Thai baht to 12.8771/9947 from 12.9355/9614.
However, it edged lower versus the Indonesian rupiah to 259.5/261.8 from 259.0/259.5, and declined vis-à-vis the Philippine peso to 7.62/7.69 from 7.60/7.62. - Bernama
