KUALA LUMPUR: The ringgit extended earlier gains to end higher against the US dollar on Wednesday driven by renewed optimism among market traders following signs of possible de-escalation in the United States-Iran war.
At 6 pm, the local currency rose to 4.0240/0295 against the greenback from Tuesday’s close of 4.0475/0520.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said market traders are observing signs of a possible de-escalation in the US-Iran war as indicated by US President Donald Trump that they are looking to withdraw from the area within a few weeks.
"Therefore, I think that has led to some form of optimism among the traders which led to the acquisition of ringgit,” he told Bernama.
At the same time, he said the US dollar index fell by 0.35 per cent to 99.613 points, indicating a weaker greenback -- a reflection of optimism that the de-escalation in war between US and Iran could happen at some point in the near future.
Meanwhile, Mohd Afzanizam said there is also an indication that the US labour market is softening as it was reported last night that the number of job openings in the US fell to 6.88 million for the month of February, compared to 7.24 million in the month of January.
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"Perhaps markets will continue to observe the incoming data, especially on the Non-farm payrolls for March, and thoughts of possible monetary easing by the Federal Reserve could actually gain more steam as the focus could shift toward promoting growth and support the labour markets.
"So, this could be a catalyst for the weakening of the US dollar index in the near term. But I think the situation is still very fluid and we will continue to be dictated by the situation in the war between the US and Iran,” he added.
At the close, the ringgit was traded lower against a basket of major currencies.
It weakened against the British pound to 5.3507/3580 from 5.3484/3543 at yesterday’s close, fell versus the Japanese yen to 2.5358/5394 as compared with 2.5351/5381 previously, and slipped vis-à-vis the euro to 4.6666/6730 from 4.6417/6468.
The local currency traded mixed against ASEAN currencies.
It went down versus the Singapore dollar to 3.1369/1414 from 3.1361/1399 at Tuesday’s close and eased against the Philippine peso to 6.68/6.69 from 6.66/6.67.
However, it strengthened versus the Indonesian rupiah to 236.9/237.3 from 237.5/237.8, appreciated to 12.2726/2926 against the Thai baht from 12.3515/3756 at yesterday’s closing. - Bernama
