Ringgit records best close in 16 months

KUALA LUMPUR: The ringgit ended Wednesday’s trading at around 4.41 against the United States dollar (USD), marking the best closing price in 16 months, as the U.S. Federal Reserve (Fed) is seen on track to reduce interest rates in September.

According to Bernama, at 6 PM, the ringgit surged to 4.4170/4235 against the USD, up from 4.4440/4505 at Tuesday’s close.

The previous highest closing rate for the local currency was 4.4160/4210, recorded on April 11, 2023.

The ringgit achieved this rate today, reaching a daily high of 4.4160 at 9:24 AM.

Chief Economist of Bank Muamalat Malaysia Bhd, Dr. Mohd Afzanizam Abdul Rashid, noted that the latest U.S. Producer Price Index (PPI) data was lower than expected at 2.2% in July compared to the consensus estimate of 2.3%.

He stated that this figure indicates a decline from the 2.7% recorded in June, confirming that disinflation trends in the U.S. are progressing well.

“The U.S. Consumer Price Index (CPI) data, which will be released later tonight, is expected to follow a similar trajectory and strengthen expectations for monetary easing.

“Consequently, the prospect of a lower interest rate differential between the Federal Funds Rate and Malaysia’s Overnight Policy Rate will enhance the appeal of ringgit assets from the perspective of foreign investors,” he told Bernama.

Mohd Afzanizam also mentioned that the current support level is identified at RM4.4005.

“If it surpasses this level, the next support level is at 4.3000,” he said.

The ringgit traded higher against most major currencies before the market closed.

The local unit strengthened against the yen to 3.0027/0073 from 3.0053/0099 at Tuesday’s close, and was more stable against the pound at 5.6754/6838 from 5.6839/6922.

However, the ringgit fell against the euro to 4.8684/8756 from 4.8520/8591.

Meanwhile, the ringgit traded mixed against ASEAN currencies.

The domestic currency strengthened against the Singapore dollar to 3.3582/3634 from 3.3590/3642 yesterday, and increased against the Philippine peso to 7.75/7.77 from 7.80/7.81.

However, the ringgit declined against the Indonesian rupiah to 281.7/282.3 from 280.6/281.1 on Tuesday and fell against the Thai baht to 12.6399/6668 from 12.6351/6578.