Kuala Lumpur: The local currency traded 0.4% weaker against the US dollar as the US Dollar Index rose further to 108.142 points following the US Federal Reserve’s (Fed) decision to cut the Fed Funds Rate by 25 basis points last night.
However, the ringgit was seen trading stronger when indexed to a basket of currencies, including Asean currencies.
At 8.03am, the ringgit stood at 4.4850/4.4925 against the greenback from Wednesday’s close of 4.4670/4.4725.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the dollar-ringgit is nearing its immediate resistance level of 4.5339, as a hawkish Fed has resulted in higher demand for the US dollar.
“Market focused on the forecast for 2025, whereby the Fed anticipated to cut the benchmark by between 25 to 50 basis points as opposed to 100 basis points cut during the September forecast.
“Further, the so-called neutral rate was also bumped up to 3.0% from 2.9%. Despite that, the Fed was still of the view that the present monetary stance is restrictive to economic activities,” he noted.
At the same time, Afzanizam said the Fed viewed the balance of risks between growth and inflation as roughly equal.
“Clearly, they want to cut more but are still wary of inflation risk. As for the Trump 2.0, the chairman admitted that they are not privy to such information and, therefore, it is difficult to incorporate such scenarios in their decision-making process.
“All in all, the US dollar is at the forefront, and as such, the ringgit is likely to stay weak in the near future,” he said.
The ringgit traded higher against other major currencies.
It traded better versus the British pound to 5.6376/5.6471 from yesterday’s 5.6673/5.6743, rose against the euro to 4.6442/4.6520 from 4.6877/4.6934, and strengthened against the Japanese yen to 2.8992/2.9044 from 2.9028/2.9059 previously.
The ringgit traded mixed against Asean currencies.
It appreciated further against the Singapore dollar to 3.2903/3.2963 from 3.3045/3.3088 and rose versus the Thai baht to 12.9598/12.9916 from 13.0378/13.0618.
It fell vis-a-vis the Philippine peso to 7.60/7.62 from 7.57/7.58 at yesterday’s close and eased against the Indonesian rupiah to 278.5/279.2 from 277.4/277.9.
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