The ringgit opened firmer against the US dollar on Thursday as the greenback weakened following the release of the US Federal Open Market Committee (FOMC) meeting minutes, which showed a divide among Federal Reserve (Fed) officials over the future direction of interest rates.
At 8 am, the local currency strengthened to 4.0730/0800 against the US dollar compared with 4.0750/0800 at Wednesday’s close.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US Dollar Index (DXY) edged lower after the FOMC minutes highlighted differing views among Fed officials on whether to maintain current interest rates or raise them further.
“The minutes clearly showed a wider divide among Fed officials over the direction of future interest rates, with discussions centred on whether to keep rates unchanged or raise them.
“The Fed is no longer considering interest rate cuts. Instead, officials are debating whether to maintain the current rate or increase it further, underscoring their continued focus on containing inflation,” he told Bernama.
Mohd Afzanizam said several Fed officials viewed the current federal funds rate of 3.50% to 3.75% as restrictive, leading to softer demand for the US dollar and providing support for Asian currencies including the ringgit.
“As a result, the US dollar softened, giving Asian currencies, including the ringgit, room to strengthen today,” he said.
Markets are also awaiting Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) decision later Thursday, with the Overnight Policy Rate (OPR) expected to remain unchanged at 2.75%.
“More importantly, the market will be looking for BNM’s latest assessment of the economy amid heightened uncertainties in West Asia,” he said.
At the opening, the ringgit traded mostly lower against major currencies.
The local note weakened against the British pound to 5.4554/4648 from 5.4369/4435 at Wednesday’s close and slipped against the euro to 4.6518/6598 from 4.6471/6528. However, it strengthened against the Japanese yen to 2.5058/5103 from 2.5083/5114.
Against regional currencies, the ringgit traded mostly higher.
It edged up against the Singapore dollar to 3.1486/1542 from 3.1487/1528 at the previous close and gained against the Indonesian rupiah to 226.1/226.5 from 226.2/226.5. The ringgit, however, slipped against the Thai baht to 12.1691/1959 from 12.1685/1882.
The local currency was unchanged against the Philippine peso at 6.62/6.64.
Bernama
