Ringgit opens higher against the US Dollar

KUALA LUMPUR: The ringgit opened higher against the US dollar and ASEAN currencies, driven by positive sentiment ahead of the announcement on Malaysia’s inflation rate for June on Wednesday.

According to Bernama, at 8 a.m., the ringgit strengthened to 4.6815/6910 against the US dollar from 4.6840/6875 last Friday.

Chief Economist at Bank Muamalat Malaysia Bhd, Mohd Afzanizam Abdul Rashid, said investors are awaiting the Consumer Price Index (CPI) data to assess the impact of the diesel subsidy rationalization implemented since June 10.

The consensus estimates the inflation rate at 2.2 percent, up from 2.0 percent in May.

“We believe the impact is expected to be minimal, given that the percentage of diesel in the CPI basket is only 0.2 percent. What is more important is how the domestic inflation trajectory will shape monetary policy decisions.

“So far, Bank Negara Malaysia has been clear about their stance on inflation, with the risk balance leaning towards an increase,” he told Bernama.

This will be positive for the ringgit, as the interest rate differential with advanced countries, especially the United States, is expected to narrow in the second half of 2024.

Meanwhile, the local currency weakened against a basket of major currencies except for the Japanese yen, where it strengthened to 2.9739/9803 from 2.9760/9786 last Friday.

It declined against the pound to 6.0541/0664 from 6.0452/0497 last week and weakened against the euro to 5.1024/1127 from 5.0957/0995 previously.

Conversely, the ringgit strengthened against ASEAN currencies, rising against the Singapore dollar to 3.4827/4901 from 3.4833/4862 last Friday and increasing against the Indonesian rupiah to 289.0/289.8 from 289.2/289.6 last week.

It also rose against the Thai baht to 12.8821/9157 from 12.9075/9221 last Friday and strengthened against the Philippine peso to 8.02/8.024 from 8.03/8.04 previously.