KUALA LUMPUR, June 26 — The ringgit strengthened against the United States dollar at the opening today, bolstered by expectations that Bank Negara Malaysia (BNM) will maintain the overnight policy rate (OPR) at 3 per cent due to higher inflation in May.
This comes as central banks worldwide lower their interest rates, a dealer said.
At 9am, the ringgit traded at 4.7065/7095 against the greenback, compared with yesterday’s close of 4.7035/7070.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid noted Malaysia’s inflation rate rose to 2 per cent in May, which could lead BNM to maintain the current OPR to manage inflation.
“Apart from that, uncertainties in the United States are evident as economic data such as the US Consumer Confidence Index declined to 100.4 points in June from 101.3 points in May.
“The Expectation Index also dropped to 73 points in June from 74.9 points previously, remaining below the 80-point threshold for five consecutive months, typically indicating a recession,” he told Bernama.
Afzanizam said tension between the markets and the US Federal Reserve (Fed) will likely persist, with markets betting the Fed’s fund rate would drop to 2.25 per cent by the first quarter of next year.
“On that score, the ringgit against the US dollar is likely to remain around RM4.71 in the near term,” he said.
The ringgit opened mixed against a basket of major currencies.
It appreciated against the Japanese yen to 2.9465/9486 from 2.9513/9537 at yesterday’s close and improved against the euro to 5.0411/0443 from 5.0440/0478, but slipped against the British pound to 5.9697/9735 from 5.9687/9732.
The ringgit was also mixed against its Asean peers.
It rose against the Thai baht to 12.7995/8115 from 12.8294/8431 at yesterday’s close and appreciated against the Singapore dollar to 3.4739/4764 from 3.4763/4792. It slid against the Indonesian rupiah to 287.3/287.7 from 287.1/287.5 and remained nearly unchanged against the Philippine peso at 8.00/8.02 from 8.00/8.01 previously.
— Bernama
