KUALA LUMPUR: The ringgit opened stronger against the US dollar today, bouncing back from a significant drop yesterday as investors navigate cautious sentiment following the US Federal Reserve’s latest policy update.
As of 8 am, the local currency improved to 4.1130/1225 against the greenback, compared to 4.1145/1195 at Thursday’s close.
Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, noted that the US Dollar Index stayed high at 100.85 points after the Federal Open Market Committee’s (FOMC) decision, as market participants scrutinize the Fed’s future interest rate trajectories.
“Investors are currently focused on projections suggesting the US central bank may increase the federal funds rate by 25 basis points later this year,” he told Bernama.
“However, global equity markets saw an increase in risk appetite following reports of a peace agreement between the US and Iran, which may facilitate the reopening of the Strait of Hormuz.”
Mohd Afzanizam added that this development could mitigate fears regarding global oil supply disruptions, potentially lowering crude oil prices and easing global inflationary pressures.
“Ultimately, such news reduces the pressure on central banks to tighten monetary policies. However, the absence of clear forward guidance in the FOMC statement has prompted a conservative approach from the market,” he explained.
“After the ringgit’s 1.29 per cent drop yesterday—a depreciation that seemed excessive compared to its regional peers—the currency is expected to stabilize today,” he added.
The ringgit also showed strength against a basket of other major currencies at the opening.
It climbed to 2.5504/5564 against the Japanese yen from 2.5588/5620, improved to 4.7135/7244 against the euro from 4.7222/7280, and strengthened to 5.4304/4429 against the British pound from 5.4476/4542.
In regional trading, the ringgit gained across the board, with the exception of the Philippine peso, which remained steady at 6.79/6.81 compared to 6.79/6.80 at Thursday’s close.
The local currency rose against the Thai baht to 12.5435/5801 from 12.5611/5809, the Indonesian rupiah to 231.1/231.7 from 231.2/231.5, and the Singapore dollar to 3.1874/1950 from 3.1898/1939.
