The ringgit opened almost unchanged against the US dollar on Tuesday as investors remained cautious over the ongoing West Asia conflict, with higher crude oil prices also lending support to the greenback, Bernama reported.
At 8am, the ringgit edged up to 4.0420/0480 against the US dollar from Monday’s close of 4.0440/0485.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the prolonged conflict could keep US inflation above the Federal Reserve’s 2% target for longer, strengthening expectations of a possible rate hike next week.
“In that sense, talks of a US interest rate hike next week are gaining momentum against a backdrop of strong non-farm payrolls (NFP) outturn last week,” he told Bernama.
He said the agreement between Iran and Oman to manage shipping through the Straits of Hormuz, which is in its final stage, suggests the conflict involving the US could continue for an extended period.
“This could mean a prolonged conflict with the US will result in higher crude oil prices in view of the ongoing disruptions to oil supplies from the Gulf region, which represents about 20 per cent of global oil supplies.
“However, we do see the ringgit will maintain its tight range posture as the positive macroeconomic backdrop domestically provides the compelling reason to stay long in Malaysian financial assets. Hence, the US dollar-ringgit could range between RM4.04 and RM4.05 today,” he said.
Quintex Intel global strategist Stephen Innes meanwhile said a stronger US consumer price index (CPI) reading could strengthen the case for a September Fed rate hike and provide short-term support for the US dollar.
“A number of analysts have started leaning more aggressively in that direction, although markets are still essentially pricing the September decision as a coin toss,” he said.
Against major currencies, the ringgit weakened against the Japanese yen to 2.6272/6313 from 2.6173/6204 on Monday.
It also slipped against the euro to 4.7000/7070 from 4.6991/7044 and eased against the British pound to 5.4753/4834 from 5.4736/479.
Against regional currencies, the ringgit was mostly firmer.
It gained against the Thai baht to 12.2995/3246 from 12.3041/3231, edged higher against the Philippine peso to 6.45/6.47 from 6.46/6.47 and strengthened against the Indonesian rupiah to 229.1/229.5 from 229.2/229.6.
However, it eased slightly against the Singapore dollar to 3.1945/1997 from 3.1943/1981 previously.
