Ringgit reverses positive trend against the greenback
Published on: Tuesday, January 31, 2023
By: Bernama
Kuala Lumpur: The ringgit reversed a seven-day advance against the US dollar to open lower today as the greenback gained strength ahead of a decision on interest rate this week.
The federal open market committee (FOMC) of the US Federal Reserve meets today and tomorrow during which it will decide on whether or not the interest rate should be raised to curb inflation, and if so, by how much.
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At 9.05am, the ringgit stood at 4.2450/4.2500 against the greenback compared with 4.2410/4.2460 at yesterday’s close.
Most market participants already expect the Fed to opt for a 25 basis-point (bps) rise, SPI Asset Management managing partner Stephen Innes told Bernama.
“Nonetheless, the great debate on whether the American central bank will signal that there is a long way to go in the rate upcycle continues,” he said.
This, he added, has dampened sentiment with investors “unwilling to fix their wagons to bulls” ahead of the US meeting.
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“Risky assets, like the ringgit, have benefited greatly from the China reopening theme and a drop in US inflation rate. However, concerns the Fed may not play ball and keep rates higher despite falling US inflation rate has traders reducing some risks.
“We are hitting the upper band of my weekly ranges, where I expected exporters to sell at the 4.2475 to 4.2500 level. I don’t think the market will move above 4.2525 after the positive holiday data from China over the Lunar New Year holiday,” he told Bernama.
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The US central bank meeting will take place today and tomorrow. The Bank of England and European Central Bank meetings are scheduled on Feb 2.
At home, the ringgit traded higher against a basket of major currencies.
The local note appreciated against the Singapore dollar to 3.2306/3.2346 from 3.2315/3.2358 yesterday and rose vis-a-vis the British pound to 5.2472/5.2534 from 5.2571/5.2633.
It strengthened versus the euro to 4.6071/4.6125 from 4.6257/4.6311 and improved against the Japanese yen at 3.2584/3.2627 from 3.2638/3.2679 at the end of yesterday.
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