KUALA LUMPUR: The ringgit opened higher against the US dollar today, recovering from yesterday's sharp decline amid cautious market sentiment following the US Federal Reserve's (Fed) latest policy decision.
At 8 am, the local currency strengthened to 4.1130/1225 against the greenback from 4.1145/1195 at Thursday’s close.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US Dollar Index remained elevated at 100.85 points following the Federal Open Market Committee's (FOMC) decision, with investors focusing on the Fed's interest rate projections.
"The market appears to be fixated on the Fed staff's projections, which suggest the US central bank could raise the federal funds rate by 25 basis points later this year.
"Despite this, risk appetite improved in global equity markets following reports of a peace agreement between the US and Iran, which could pave the way for the reopening of the Strait of Hormuz," he told Bernama.
Mohd Afzanizam said the development may help ease concerns over global oil supply disruptions, potentially leading to lower crude oil prices and more moderate inflationary pressures worldwide.
"Essentially, the news would signal less pressure for central banks to tighten their monetary policies, but the lack of forward guidance in the FOMC statement has led the market to take a conservative stance.
"Yesterday, the ringgit weakened against the greenback by 1.29 per cent, and it appears that the depreciation was rather excessive compared with other regional currencies. The ringgit could stabilise today after experiencing a sharp depreciation,” he added.
At the opening, the ringgit was firmer against a basket of major currencies.
It appreciated against the Japanese yen to 2.5504/5564 from 2.5588/5620 at Thursday's close, improved versus the euro to 4.7135/7244 from 4.7222/7280, and strengthened against the British pound to 5.4304/4429 from 5.4476/4542 previously.
Against regional currencies, the ringgit traded higher across the board, except against the Philippine peso, where it was little changed at 6.79/6.81 from 6.79/6.80 at Thursday's close.
The local note gained against the Thai baht to 12.5435/5801 from 12.5611/5809 at yesterday’s close, rose versus the Indonesian rupiah to 231.1/231.7 from 231.2/231.5 previously, and was higher against the Singapore dollar to 3.1874/1950 from 3.1898/1939. - Bernama
