Kuala Lumpur: The ringgit opened slightly higher against the US dollar and other major currencies ahead of the two-day US Federal Open Market Committee (FOMC) meeting, which starts today, and a holiday-shortened week, an analyst said.
At 8am, the ringgit strengthened to 4.3750/4.3805 against the greenback, compared to Monday’s close of 4.3760/4.3825.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the outcome of the FOMC meeting would be known on Thursday and whether the Fed Fund Rate will likely be retained at 4.50%.
He said investors are focused particularly on how FOMC members view the outlook for high inflation in light of a potential increase in import tariffs.
“What matters is the language in the accompanying statement, especially how the FOMC members see the prospect of high inflation following a possible increase in import tariff.
“Ahead of the FOMC two-day meeting, which will start today, and a holiday-shortened week, we foresee the ringgit to maintain its prevailing range of RM4.37 to RM4.38,” he added.
Afzanizam noted that the 10-year US Treasury yield was lower by 10 basis points to 4.53%, but on the contrary, the US Dollar Index (DXY) fell by 0.09% to 107.341 points.
“Additionally, there seems to be a flight to safety with the equities market; in particular, the technology-related sector fell significantly, spurred by concern over high valuation and the emergence of cheaper artificial intelligence (AI) alternatives from China,” he added.
Meanwhile, the ringgit traded higher against major currencies.
It edged up against the Japanese yen to 2.8249/2.8289 from Monday’s 2.8313/2.8357 and rose against the euro to 4.5693/4.5750 from 4.5900/4.5968, and appreciated against the British pound to 5.4508/5.4577 from 5.4643/5.4724.
However, the ringgit traded mixed against Asean currencies.
It advanced against the Thai baht to 12.9045/12.9302 from Monday’s 12.9840/13.0110, inched higher against the Singapore dollar to 3.2424/3.2470 from 3.2518/3.2569, and was little changed against the Indonesian rupiah at 270.5/270.9 compared to 270.6/271.0.
The ringgit, however, traded flat against the Philippine peso at 7.48/7.50.
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