Kuala Lumpur: The ringgit continued to weaken in early trade against the firmer US dollar today spurred by last week’s jobs report and hawkish signals from the Federal Reserve, said an analyst.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the US dollar remained on a firmer footing following the Nonfarm Payroll (NFP) data release last week which came in higher than expected.
The US Dollar Index (DXY) reportedly rose 0.53% overnight to 104.452 points.
“Today’s focus would be on the Reserve Bank of Australia (RBA) monetary policy meeting during which most economists expect the benchmark interest rate to be kept steady at 4.35%.
“There have been talks that the RBA might cut its interest rate at some point this year given the moderation of inflation rate to 4.1% in the final quarter of 2023 from 5.3% in the prior quarter,” he noted.
Afzanizam was explaining some of the reasons why market participants are bullish on the US dollar as the Fed is seemingly unlikely to budge its restrictive stance anytime soon.
As such, the ringgit is likely to trade around RM4.74 to RM4.75 against the US dollar today, he said.
“From a technical standpoint, the ringgit is already in an oversold situation, suggesting further depreciation will be limited,” he added.
At 9.01am, the ringgit fell to 4.7570/4.7620 against the greenback from Monday’s close of 4.7460/4.7520.
Against a basket of major currencies, the ringgit was traded mostly lower.
It declined vis-a-vis the Japanese yen to 3.2012/3.2048 from 3.1957/3.2000 at Monday’s close and depreciated against the euro to 5.1109/5.1163 from 5.1038/5.1103.
However, it was up against the British pound to 5.9653/5.9715 from 5.9804/5.9880 previously.
The local note traded lower versus Asean currencies.
The ringgit was down against the Singapore dollar to 3.5321/3.5361 versus 3.5260/3.5307 on Monday’s close and fell versus the Thai baht to 13.2970/13.3169 from 13.2559/13.2782.
It was lower against the Indonesian rupiah at 302.8/303.2 compared to 302.1/302.6 yesterday and inched down versus the Philippine peso to 8.45/8.46 from 8.43/8.45.
