KUALA LUMPUR, July 16 — The ringgit opened firmer against the greenback today as US stocks tumbled after Federal Reserve chairman Jerome Powell’s dovish testimony failed to provide any fresh catalysts to buy risky assets, an analyst said.
At 9am, the local note rose by 20 basis points (bps) to open at 4.2000/2015 versus the US dollar from 4.2020/2030 at Thursday’s close.
Powell noted that inflation would overshoot over the Fed’s two per cent target for a while before going down to match the target, signalling that it was premature to tighten the policy.
As such, OANDA senior market analyst Edward Moya said, investors were uninspired by today’s mixed economic data and third day of US banks reporting relatively strong earnings.
“Risk aversion is firmly in place, possibly because the earnings bar may have been set too high for the banks and because the reopening trade can’t get its groove back,” he told Bernama.
Meanwhile, Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said that worries over the rapid spread of the Covid-19 Delta variant had forced many countries in Asia to tighten movement restrictions again, which should adversely impact oil prices amid slower demand prospects.
“A weaker oil price will then translate into a weaker ringgit given the nature of Brent crude oil price having a causality effect towards the local note,” he said.
He forecast the ringgit would continue to trade within a range of RM4.19 to RM4.20 today.
At the opening bell, the ringgit was traded higher against a basket of major currencies.
The local note appreciated to 4.9606/9624 against the euro from 4.9764/9776 at Thursday’s close, rose vis-a-vis the Japanese yen to 3.8220/8237 from 3.8256/8265, strengthened to 3.0994/1010 versus the Singapore dollar from 3.1052/1062, and increased against the British pound to 5.8090/8111 from 5.8252/8266 previously.
— Bernama
