Ringgit eases vs US$ in early trade as investors hold dollars

KUALA LUMPUR: The ringgit continued to trade on the back foot today, opening lower against the US dollar following better-than-expected United States’ (US) ISM Manufacturing Index data.

Analysts said that this prompted traders to increase their bets on a November rate hike by the US Federal Reserve (US Fed), lending support to the greenback.

At 9.01 am, the local note slipped to 4.7220/7270 against the greenback from yesterday’s close of 4.7150/7195.

SPI Asset Management managing partner Stephen Innes told BK that the US dollar traded slightly stronger into the weekend and the market foresees the US Fed’s hawkishness to continue driving the forex market.

Echoing the sentiment, Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the improvement in the US ISM PMI could bolster the case for further interest rate hikes in November by the Fed, encouraging them to keep the rates higher for longer.

“On this score, the ringgit is expected to remain weak as investors prefer to hold the greenback in view of the positive carry,” he added.

Meanwhile, the ringgit was traded higher versus a basket of major currencies except for the Japanese yen, where it fell to 3.1507/1543 from 3.1492/1524 on Monday’s close.

It rose against the euro to 4.9458/9511 from 4.9677/9725 yesterday and appreciated vis-a-vis the British pound to 5.7075/7135 from 5.7358/7413 previously.

At the same time, the local note was traded mixed against other Asian currencies.

It increased versus the Thai baht to 12.7312/7498 from 12.7626/7796 at yesterday’s close and was slightly lower against the Indonesian rupiah at 304.0/304.5 compared with yesterday’s close of 303.5/304.0.

It was flat against the Philippines’ peso at 8.30/8.32 compared with Monday’s closing of 8.30/8.31 and inched up vis-a-vis the Singapore dollar to 3.4372/4411 from 3.4373/4409 previously. – BK