The ringgit opened stronger against the US dollar

KUALA LUMPUR: The ringgit strengthened against the United States (US) dollar in the early trading session on Wednesday, driven by expectations that Bank Negara Malaysia (BNM) will maintain the overnight policy rate (OPR) at 3.00 percent due to rising inflation in May 2024.

According to Bernama, traders said the development occurred when central banks around the world had begun to lower their respective interest rates.

At 9 am, the ringgit traded at 4.7065/7095 against the US dollar from 4.7035/7070, previously.

Bank Muamalat Malaysia Bhd’s Chief Economist Dr Mohd Afzanizam Abdul Rashid said Malaysia’s inflation rate increased to 2.0 percent last May which could encourage BNM to maintain the current OPR in an effort to manage inflation.

“In the meantime, the reality of uncertainty in the United States (US) is proven following the announcement of economic data such as the US Consumer Confidence Index which dropped to 100.4 points in June from 101.3 points in May, 2024.

“The Expectation Index also dropped to 73 points in June from 74.9 points, which remains below the threshold value of 80 points for five consecutive months which usually indicates a recession,” he said.

Mohd Afzanizam said the ongoing uncertainty between the market and the US Federal Reserve (Fed) is expected to continue with the market expecting the Fed rate to likely drop to 2.25 percent by the first quarter of next year.

“Based on that score, the ringgit level against the US dollar is expected to remain around RM4.71 in the near term,” he said.

In the meantime, the ringgit traded mixed compared to the main currency group.

The local currency strengthened against the Japanese yen to 2.9465/9486 from 2.9513/9537 in late trade on Tuesday and rose against the euro to 5.0411/0443 from 5.0440/0478, but eased against the British pound to 5.9697/9735 from 5.9687/9732.

In addition, the ringgit also recorded a mixed performance compared to the currencies of other ASEAN member countries.

This included an increase against the Thai baht to 12.7995/8115 from 12.8294/8431 and an increase against the Singapore dollar to 3.4739/4764 from 3.4763/4792.

The ringgit however fell against the Indonesian rupiah to 287.3/287.7 from 287.1/287.5 and was almost unchanged against the Philippine peso at 8.00/8.02 from 8.00/8.01, previously.