Ringgit opens marginally higher against US dollar on weaker DXY

KUALA LUMPUR: The ringgit opened marginally higher against the US dollar on Wednesday, supported by a weaker US Dollar Index (DXY) as investors reassessed the outlook for US interest rates following signals that the Federal Reserve may adopt a less aggressive monetary policy stance.

At 8am, the ringgit rose to 4.0830/0880 against the greenback from Tuesday's close of 4.0835/0880.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the DXY fell 0.40 per cent to 102.810 points after US Federal Reserve Bank of New York President John Williams indicated that the Fed Funds Rate may not be raised in 2027, as inflation is expected to ease gradually towards the two per cent target.

"In addition, Williams suggested that the US economy is not overheating and therefore, it does not warrant an aggressive rate increase," he told Bernama.

Meanwhile, Mohd Afzanizam said US inflation numbers would be closely monitored, with the Consumer Price Index (CPI) projected to rise to 3.6 per cent in September from 3.4 per cent previously, based on consensus estimates.

Therefore, he said it could be positive for the ringgit, although market sentiment remains cautious.

"Hence, the ringgit-US dollar could maintain its narrow range trade of RM4.07 to RM4.09 today," he added.

At the opening, the ringgit traded mostly lower against a basket of major currencies.

The local note was higher against the Japanese yen to 2.5790/5823 from 2.5833/5864 at Tuesday's close, but edged down against the British pound to 5.4128/4195 from 5.4057/4177 and eased against the euro to 4.5734/5790 from 4.5654/5704.

However, against its Asean peers, the ringgit traded mixed.

The local note advanced against the Thai baht to 12.1626/1848 from 12.1663/1844 at Tuesday's close, but was marginally lower against the Singapore dollar to 3.1903/1950 from 3.1902/1940 yesterday.

Meanwhile, the ringgit was unchanged against the Indonesian rupiah at 228.1/228.4, and remained flat against the Philippine peso at 6.50/6.51.