Kuala Lumpur: The ringgit extended its uptrend against the US dollar on Wednesday, supported by a 0.43 per cent drop in the US Dollar Index (DXY) to 98.097 after the headline US inflation rate came in lower than expected.
At 8 am, the local note rose to 4.2115/2285 against the greenback from Tuesday’s close of 4.2290/2320.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit is likely to be well supported today, with the US dollar-ringgit (USD/MYR) expected to trade between RM4.20 and RM4.23 amid a high probability of a US interest rate cut.
He noted that the softer US inflation rate of 2.7 per cent in July was largely driven by a moderation in the Owner’s Equivalent Rent (OER) to 4.1 per cent, after holding at 4.2 per cent for two straight months.
OER accounts for about 25 per cent of the Consumer Price Index (CPI) weightage, he said.
“The US benchmark equity indices rose more than one per cent, while the yield on the two-year US Treasury note fell by four basis points to 3.73 per cent.
“This suggests that the lower-than-expected headline inflation has strengthened expectations for a US rate cut, fuelling the rally in the equities market,” he told Bernama.
At the opening, the ringgit, however, traded mostly lower against major currencies.
It fell versus the Japanese yen to 2.8502/8619 from Tuesday’s close of 2.8490/8512 and declined against the euro to 4.9182/9380 from 4.9090/9125 yesterday.
But against the the British pound, the local note appreciated to 5.6876/7106 from 5.6905/6946.
The ringgit trended higher against regional peers.
It advanced against the Singapore dollar to 3.2825/2960 from 3.2867/2893 at yesterday’s close and strengthened versus the Thai baht to 12.9965/13.0570 from 13.0135/0300.
The local note also appreciated versus the Indonesian rupiah to 258.5/259.6 from 259.6/259.9 previously and rose vis-a-vis the Philippine peso to 7.38/7.41 from 7.41/7.42
