KUALA LUMPUR, May 23 — The ringgit opened marginally lower against the US dollar on better demand for the greenback on the expected increase of the US bond yields, said an analyst.
At 9.04am, the local note stood at 4.5475/5520 versus the greenback from Monday’s closing rate of 4.5470/5515.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the latest message from the US Treasury Secretary Janet Yellen continued to indicate the debt ceiling impasse could potentially be a catastrophe for the economy as the government would not be able to repay its financial commitment including its debt obligation.
“This might result in bond yields to rise as the credit risks for the US government would escalate.
“As such, this will continue to exert weaker sentiment in the foreign exchange (FX) market, leading to higher demand for the US dollar as investors are seeking refuge against extreme volatility,” he told Bernama.
Mohd Afzanizam further said the US dollar Index (DXY) remained at elevated levels, with US dollar-ringgit yesterday surpassing the immediate resistant level of 4.5491.
“The next resistance level would be at 4.6257 based on technical readings.
“However, ringgit is already at an oversold position and, therefore, the US dollar-ringgit would remain in a narrow range of around 4.5500 as we believe there could be some compromise from the US debt ceiling stalemate,” he added.
Meanwhile, the ringgit was traded firmer against a basket of major currencies.
It strengthened vis-a-vis the British pound to 5.6548/6604 from 5.6578/6634 on Monday, up against the euro to 4.9154/9203 from 4.9189/9238 and was higher against the Japanese yen at 3.2810/2845 from 3.2973/3008 yesterday.
The local note was traded mixed against other Asean currencies.
It was unchanged versus the Indonesian rupiah at 305.3/305.8 from Monday’s close, rose to 3.3773/3811 from 3.3799/3835 against the Singapore dollar and gained vis-a-vis the Thai baht to 13.1835/2019 from 13.1950/2138.
However, the ringgit was marginally lower against the Philippine pesos to 8.16/8.17 against 8.14/8.16 from Monday’s close.
— Bernama
