The ringgit opened higher today as the US dollar Index (DXY) declined after the US Federal Reserve (Fed) provided a clear signal on its monetary stance for next year.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the Federal Open Market Committee (FOMC) has decided to maintain the Fed Fund Rate (FFR) at 5.25% to 5.50% but signalled more interest rate cuts between 2024 and 2026.
“The Fed is signalling rate cuts are going to happen in 2024. The main questions now are the quantum of the rate reduction, and how fast they are willing to shift their stance,” he said.
The two-year US Treasury yield was down by 27 basis points to close at 4.46% while the 10-year note yielded 4.04%, declining by 16 basis points.
Afzanizam said the local note is set to appreciate further today with the Fed’s clear signal.
“The ringgit has already breached its immediate support level of RM4.6611 to the greenback. The next support level is situated at RM4.5778,” he said.
Meanwhile, against a basket of major currencies, the ringgit traded mostly better in early trade.
At 9am, the ringgit improved to 4.6610/6670 against the US dollar from Wednesday’s close of 4.7035/7085 .
The DXY edged lower by 0.96% to 102.869 points.
It rose against the British pound to 5.8896/5.8972 from 5.8916/5.8979 at Wednesday’s close, depreciated vis-a-vis the euro to 5.0768/5.0833 from 5.0737/5.0791, but weakened against the Japanese yen to 3.2775/3.2820 from 3.2249/3.2285.
The ringgit was also mostly higher against a few Asean currencies, Bernama reported.
It strengthened against the Philippine peso to 8.35/8.38 from to 8.39/8.40, was firmer against the Indonesian rupiah to 297.5/298.1 from 300.2/300.8 at yesterday’s close.
The local note edged up versus the Singapore dollar to 3.4995/3.5045 from 3.5001/3.5041 previously, but dropped against the Thai baht to 13.2864/13.3115 from 13.1390/13.1592.
