KUALA LUMPUR: The ringgit opened higher against the US dollar on Thursday as concerns over the rising US government debt weighed on the greenback, dimming expectations of a US interest rate hike, an economist said.
At 8 am, the local currency strengthened to 4.0455/0540 against the greenback from Wednesday’s close of 4.0565/0610.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam said US government debt is currently in the spotlight, with public debt outstanding having crossed US$40 trillion, surging by a third in less than five years.
"This happened at a time when the US Treasury Department attempted to bring down long-term yields via direct intervention in the bond market,” he told Bernama.
He said that if the US Federal Reserve (Fed) opts to raise the interest rate in the near term, it could further undermine the US government's ability to repay its debt obligations.
Consequently, the US Dollar Index (DXY) fell 0.86 per cent to 98.798 points as the odds of a rate hike in September diminished.
"This is seen to be ringgit-positive as the interest rate differentials between the Fed Funds Rate and the overnight policy rate would remain steady,” he said.
He expects the ringgit to perform favourably against the US dollar between RM4.04 and RM4.06 today.
At the opening, the local currency traded lower against a basket of major currencies.
It slid against the Japanese yen to 2.5562/5616 from 2.5498/5528 at Wednesday’s close and slipped against the British pound to 5.5023/5138 from 5.4994/5055.
The ringgit was also down against the euro at 4.7231/7330 from 4.7080/7132 previously.
The local note also traded mixed against regional currencies.
It was weaker against the Singapore dollar to 3.1819/1891 from 3.1778/1816 and edged down against the Thai baht to 12.3046/3372 from 12.2686/2871, previously.
The ringgit was higher vis-à-vis the Indonesian rupiah at 226.7/227.3 from 227.3/227.7 at Wednesday’s close and increased versus the Philippine peso to 6.54/6.56 from 6.56/6.57. - Bernama
