Ringgit opens lower against US$ on technical correction

KUALA LUMPUR: The ringgit opened lower against the US dollar today as technical correction prevailed following a sizeable rally over the last three trading days, said an analyst.

At 9.05 am, the ringgit depreciated to 4.6550/6600 versus the greenback from Monday’s closing rate of 4.6340/6400.

SPI Asset Management managing director Stephen Innes said the US yields have lifted and introduced a minor corrective element to the unbroken confidence that ringgit investors had shown following last week’s Federal Open Market Committee (FOMC) meeting.

“So, US dollar/ringgit will correct higher (weaker ringgit) today after experiencing a sizeable rally over the last three trading sessions.

“This is not uncommon after big moves as the market pauses to reflect and decide the next short-term direction, especially ahead of a deluge of Federal Reserve (Fed) speakers this week and the all-important US bond auctions slated for later in the week,” he told BK.

Bank Muamalat Malaysia Bhd chief economist and head of social finance Dr Mohd Afzanizam Abdul Rashid said the two-year and 10-year US Treasuries saw a rebound last night, respectively rising by 10 and eight basis points to close at 4.94 per cent and 4.65 per cent, while the US Dollar Index (DXY) was up by 0.25 per cent to 105.281 points.

He said it had been risk-on mode for markets since the Fed slightly changed its tone in the recent FOMC meeting and the lower-than-expected nonfarm payrolls print last week.

“Perhaps there could be some correction today following a sharp appreciation yesterday. The current support and resistance levels for the US dollar/ringgit are located at RM4.5578 and RM4.6611.

“As such, the ringgit might linger around RM4.63 to RM4.65 today,” he said.

Meanwhile, the local currency was marginally higher vis-a-vis the British pound to 5.7424/7486 from 5.7462/7536 at Monday’s close but was traded lower against other major currencies such as the Japanese yen and the euro.

It fell against the Japanese yen to 3.1021/1056 from 3.0959/1002 at yesterday’s close and weakened versus the euro to 4.9850/9904 from 4.9806/9871 previously.

The local note was also traded lower against other Asean currencies.

It declined against the Singapore dollar to 3.4430/4470 from 3.4341/4388 at the end of yesterday’s trading and decreased vis-a-vis the Indonesian rupiah to 299.5/300.0 from 298.1/298.7.

Similarly, the ringgit eased against the Thai baht to 13.0887/1090 from 13.0521/0741 on Monday and shrank versus the Philippine peso to 8.30/8.32 from 8.29/8.30 previously. – BK