Ringgit opens higher as US dollar index declines

KUALA LUMPUR: The ringgit opened higher versus the US dollar this morning following a decline in the US Dollar Index (DXY) as investors awaited further clues on whether the US Federal Reserve would increase interest rates again.

At 9 am, the local currency rose to 4.7290/7340 against the greenback from Monday’s close of 4.7340/7380.

The DXY declined as investors seemed to be taking profits from last week’s gains, which saw the greenback gaining over one per cent against its rivals.

Meanwhile, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the US Treasury yields were flatter although they remained inverted for quite some time.

The 10-year Treasury yield was higher last night by nine basis points to close at 4.74 per cent while the two-year note rose only slightly by four basis points to 5.10 per cent.

He told BK that the rise in long-term yields reflected inflation premium, which resonated with the ongoing conflict in the Middle East which may give rise to higher oil prices.

“Subsequently, how that translates into the US Federal Reserve (Fed) move in respect to monetary policy remains highly uncertain. As such, we foresee the ringgit-US dollar to maintain its tight range level of around RM4.73 to RM4.74 today,” he said.

ActivTrades trader Dyogenes Rodrigues Diniz said the upward movement of the ringgit came after it broke the resistance at 4.6800 on the daily chart.

“This resistance is important because it has managed to hold the price below it since Nov 11, 2022.

“Due to the break of the previously mentioned resistance, the ringgit-US dollar appears to be on its way to touching the all-time high at 4.7475,” he said.

Diniz also said when the rate touches this region (4.7475), it is possible that there would be an entry of the selling force, which could push the rate towards the 4.6800 level again.

The ringgit was traded mostly lower versus a basket of major currencies.

It depreciated vis-à-vis the British pound to 5.7732/7793 from 5.7494/7543 at Monday’s close and weakened versus the euro to 4.9915/9967 from 4.9858/9901, but improved against the yen to 3.1632/1668 from 3.1668/1697 yesterday.

In contrast, the local note was traded mostly higher against other Asean currencies.

The ringgit strengthened versus the Thai baht to 13.0275/0464 from 13.0392/0549 at yesterday’s close and ticked up against the Indonesian rupiah to 300.7/301.2 from 301.0/301.5.

However, it slipped against the Singapore dollar to 3.4566/4605 from 3.4560/4592 on Monday and was flat vis-a-vis the Philippine peso at 8.33/8.36 versus 8.33/8.34 previously. – BK