Ringgit ends lower on firmer US dollar index

KUALA LUMPUR: The ringgit was lower against the US dollar at the close on Wednesday due to a lack of demand as the US Dollar Index (DXY) continued to strengthen, said an economist.

At 6.01 pm, the ringgit eased to 4.7390/7440 versus the greenback from Tuesday’s close of 4.7375/7400.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the DXY gained further strength today by 0.19 per cent to 105.616 points.

“Following this, other regional currencies such as the Singapore dollar, the Thai baht and the Philippine peso depreciated against the US dollar by 0.13 per cent, 0.38 per cent and 0.25 per cent, respectively. Similarly, the US dollar/ringgit pair depreciated by 0.18 per cent to RM4.7472,” he told BK.

He said the greenback’s bullish sentiment has yet to recede despite weaker-than-expected job reports last Friday.

“Comments from US Federal Reserve (Fed) officials are still mixed which could result in the foreign exchange market leaning on the conservative side in respect to Fed’s monetary policy stance which is to bring inflation towards two per cent,” he added.

Meanwhile, SPI Asset Management managing director Stephen Innes said US Treasury yield continued its rally post-April’s lacklustre US jobs report, which is typically good for the ringgit. Nevertheless, the broad DXY has stabilised around the 105 level.

“Foreign exchange traders are already looking ahead to next week’s inflation data, which could potentially shape the dollar’s next directional move.

“This could create a range trade environment or even trigger more weakness depending on the FTSE Bursa Malaysia KLCI (FBM KLCI), which has been driving capital inflows these days in support of the ringgit,” he added.

At the close, the ringgit traded higher against a basket of major currencies.

It rose versus the Japanese yen to 3.0495/0530 from Tuesday’s close of 3.0646/0664, strengthened vis-a-vis the British pound to 5.9209/9272 from 5.9385/9416 earlier and went up against the euro to 5.0954/1007 from 5.0971/0998 previously.

The local note traded mostly higher against ASEAN currencies, except the Indonesian rupiah.

Against the Thai baht, the ringgit appreciated to 12.8188/8383 from Tuesday’s 12.8332/8459, firmed versus the Singapore dollar to 3.4956/4996 from 3.4989/5010 and was higher against the Philippine peso at 8.26/8.27 from 8.27/8.28 previously.

The local note was unchanged vis-a-vis the Indonesian rupiah at 295.2/295.7 from 295.2/295.5 previously. – BK