Ringgit opens higher against major currencies, flat vs greenback

The ringgit opened higher against major currencies but remained flat against the US dollar amid renewed expectations of a possible US Federal Reserve (Fed) interest rate hike following stronger-than-expected inflation data.

At 8am, the local currency traded at 4.0540/4.0590 against the greenback, unchanged from Tuesday’s close of 4.0540/4.0580.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said US inflation data had heightened concerns over further monetary tightening, with the US Consumer Price Index (CPI) rising 0.4% month-on-month in October, above the consensus estimate of 0.3%.

He said the prospect of higher interest rates also pushed yield on the two-year US Treasury note up by 18 basis points to 4.74%, while the US Dollar Index strengthened 0.57% to 102.233 points.

“Fed governor Christopher Waller indicated that a 50 basis point hike could happen when the Federal Open Market Committee members reconvene on Dec 8 and 9, while Dallas Fed president Larrie Logan sees at least a two-quarter-point rate hike as necessary.

“As such, the ringgit could be experiencing downward pressure following the overnight trend in the US market. The US dollar-ringgit pair could trade within an RM4.06 to RM4.08 range today,” he added.

The ringgit traded firmer against a basket of major currencies.

It rose against the Japanese yen to 2.5540/2.5573 from 2.5642/2.5669, appreciated vis-a-vis the euro to 4.5275/4.5331 from 4.5514/4.5559 and strengthened against the British pound to 5.4109/5.4175 from 5.4425/5.4479 at Tuesday’s close.

The ringgit, however, traded mixed against its Asean peers.

It improved against the Singapore dollar to 3.1627/3.1669 from yesterday’s close of 3.1726/3.1758 and climbed against the Thai baht to 12.0561/12.0800 from 12.1337/12.1497. It was almost flat vis-a-vis the Indonesian rupiah at 224.4/224.8 from 224.4/224.7 and was unchanged against the Philippine peso at 6.44/6.45.