KUALA LUMPUR: The ringgit opened lower against the US dollar on Tuesday amid elevated US Treasury yields and uncertainty over the US Federal Reserve’s (Fed) interest rate outlook, said an analyst.
At 8 am, the local currency eased to 4.0300/0350 against the greenback from last Friday’s close of 4.0230/0270.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the 30-year US Treasury bond yield has been rising persistently to 5.25 per cent, amid expectations that the Fed could maintain a cautious stance on interest rates at the upcoming Federal Open Market Committee meeting on September 15-16.
"This happened following Fed chairman Kevin Warsh’s speech on Friday at the Jackson Hole Symposium, where he explicitly indicated that inflation remains high while the labour market remains healthy.
"This seems to be a cue for raising interest rates, which appears to be in contradiction with the US Treasury Department’s aim of lowering long-term bond yields through its buyback plans,” he told Bernama.
This week, Mohd Afzanizam said the focus will be on the release of Nonfarm Payroll (NFP) data points, with consensus estimates showing a recovery of 58,000 in August after witnessing job losses of 23,000 in the prior month.
On another note, he said the ringgit is expected to remain cautious against the US dollar amid the resumption of military attacks between the US and Iran, which had pushed Brent crude prices higher to US$90.49 per barrel.
"Hence, the US dollar-ringgit pair is likely to range between 4.02 and 4.04 today,” he added.
At the opening, the ringgit traded mostly higher against a basket of major currencies.
The ringgit strengthened against the British pound to 5.4594/4662 from last Friday’s close of 5.4632/4687 and appreciated against the euro to 4.6817/6875 from 4.6828/6874, but depreciated against the Japanese yen to 2.5222/5255 from 2.5193/5219.
The local note traded mostly lower against regional currencies.
It fell against the Singapore dollar to 3.1702/1747 from 3.1652/1686 and was little changed against the Indonesian rupiah to 227.3/227.8 from 227.3/227.7 on Friday.
However, it rose against the Thai baht to 12.1525/1738 from 12.2087/2253 but remained flat against the Philippine peso at 6.46/6.47. - Bernama
