KUALA LUMPUR: The ringgit was almost flat against the US dollar at Tuesday’s open, as investors remained cautious amid the ongoing West Asia conflict, which continued to drive crude oil prices higher and support the greenback.
At 8 am, the local currency inched up to 4.0420/0480 against the greenback from Monday’s close of 4.0440/0485.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the continued conflict suggests US inflation may remain above the US Federal Reserve’s two per cent target for a prolonged period.
"In that sense, talks of a US interest rate hike next week are gaining momentum against a backdrop of strong non-farm payrolls (NFP) outturn last week,” he told Bernama.
Mohd Afzanizam said the agreement between Iran and Oman to manage shipping through the Straits of Hormuz, now in its final stage, indicates that the conflict with the US could persist for an extended period.
"This could mean a prolonged conflict with the US will result in higher crude oil prices in view of the ongoing disruptions to oil supplies from the Gulf region, which represents about 20 per cent of global oil supplies.
"However, we do see the ringgit will maintain its tight range posture as the positive macroeconomic backdrop domestically provides the compelling reason to stay long in Malaysian financial assets. Hence, the US dollar-ringgit could range between RM4.04 and RM4.05 today,” he said.
Meanwhile, Quintex Intel global strategist Stephen Innes said a stronger US consumer price index (CPI) reading could bolster the case for a September Fed interest rate hike and provide short-term support for the US dollar.
"A number of analysts have started leaning more aggressively in that direction, although markets are still essentially pricing the September decision as a coin toss,” he said.
The ringgit traded lower against a basket of major currencies.
It slipped against the Japanese yen to 2.6272/6313 from 2.6173/6204 at Monday’s close, fell versus the euro to 4.7000/7070 from 4.6991/7044, and eased vis-a-vis the British pound to 5.4753/4834 from 5.4736/479 previously.
However, the local note traded mostly higher against regional currencies.
It gained against the Thai baht to 12.2995/3246 from 12.3041/3231 at the previous close, edged up versus the Philippine peso at 6.45/6.47 from 6.46/6.47, and inched up vis-a-vis the Indonesian rupiah to 229.1/229.5 from 229.2/229.6, yesterday.
The ringgit inched down versus the Singapore dollar to 3.1945/1997 from 3.1943/1981, previously. - Bernama
