Ringgit continues to rise, closes stronger against US Dollar

KUALA LUMPUR: The ringgit continued its upward trend on Thursday, closing stronger against the US dollar due to increasing expectations of a reduction in interest rates in the US, according to an analyst.

According to Bernama, at 6 p.m. yesterday, the local currency rose against the US dollar to 4.3360/3400 from 4.3505/3560 when it closed on Wednesday.

Dr. Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, stated that the ringgit received strong support today following a decline in the US Dollar Index due to weak labor market data in the US.

The Job Openings and Labor Turnover Survey (JOLTS) data released on Wednesday showed that new job openings in the US fell more than expected to 7.673 million in July, compared to 7.91 million in June.

“This worsened as new job openings fell more than expected in July, indicating that the Federal Reserve (Fed) might need to take decisive action to loosen its monetary policy to achieve what is called a gradual reduction,” he said.

Domestically, Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent in its meeting yesterday.

Mohd Afzanizam noted that this OPR rate supports growth.

Therefore, he believes BNM may keep the OPR stable at 3.00 percent for the remainder of 2024.

“This move should be positive for the ringgit as the gap between the Fed Funds Rate and the OPR will narrow in the near term,” he said.

Meanwhile, the ringgit closed mostly lower against a basket of major currencies.

The local currency closed higher against the British pound at 5.7049/7101 from 5.7052/7125 on Wednesday, but was slightly lower against the euro at 4.8099/8144 from 4.8082/8143 and fell against the Japanese yen to 3.0189/0219 from 2.9981/3.0021 previously.

The ringgit also traded lower against ASEAN currencies.

It weakened against the Singapore dollar to 3.3303/3336 from 3.3299/3344 yesterday and dropped against the Indonesian rupiah to 281.5/281.9 from 281.0/281.5.

It fell against the Philippine peso to 7.71/7.72 from 7.69/7.70 and weakened against the Thai baht to 12.8772/8940 from 12.7096/7294 previously.