KUALA LUMPUR, Oct 6 — The ringgit further slipped against the US dollar at the close today as concern rose over higher global inflation rate following elevated levels of commodity prices, which appeared to have lent support for the greenback, an analyst said.
At 6 pm, the local note fell to 4.1825/1845 versus the greenback from Tuesday’s closing of 4.1785/1795.
According to Bank Islam chief economist Mohd Afzanizam Abdul Rashid, the oil supply shocks following the underinvestment in production facilities would make a stronger case for quantitative easing tapering and higher interest rates in the United States soon.
He said this had led the US Dollar Index to surpass the 94 mark, while the local note weakened.
“There was a lack of investment in the oil and gas industry during the pandemic, so when the demand surges now, it is not accompanied by the capacity to produce accordingly and that would create a shock to the system, leading to higher oil prices,” he said.
As such, Mohd Afzanizam said, the scenario would give more reason for the US Federal Reserve (Fed) to increase the interest rates that would also enhance the US dollar’s appeal.
“This week the non-farm payrolls report, which is set to be released on Friday, will be closely watched as market participants would want to second-guess the Fed’s next move in the upcoming meeting,” he said.
Until then, he said, the ringgit would remain choppy in the near term.
At the close, the ringgit was traded mainly higher against a basket of major currencies.
It appreciated versus the Japanese yen to 3.7501/7522 from 3.7587/7596 at Tuesday’s close, climbed against the Singapore dollar to 3.0702/0719 compared with 3.0801/0813, and rose vis-a-vis the euro to 4.8270/8293 from 4.8475/8486 previously.
However, the local note dropped to 5.6669/6696 versus the British pound from 5.6620/6933 yesterday.
— BERNAMA
