THE ringgit opened slightly lower against the US dollar on Monday as global risk appetite turned more cautious, driving investors towards safe-haven assets and putting pressure on emerging-market currencies.
At 8am, the local currency slipped to 4.0580/0680 against the greenback, compared with last Friday’s closing level of 4.0515/0560.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said the softer opening reflected a broader “risk-off” mood in global markets, which typically benefits the US dollar because of its liquidity and safe-haven status.
“Periods of de-risking typically see capital rotate into the US dollar as a liquid safe haven, leaving regional currencies, including the ringgit, under temporary pressure,” he told Bernama.
He said the latest US military strike on Venezuela had added to the cautious tone in markets. “The latest US military strike on Venezuela has added to this risk-off tone.
While the event itself does not alter Malaysia’s economic fundamentals, it heightens geopolitical uncertainty, which tends to lift demand for US assets and reinforce near-term dollar strength,” he said.
Mohd Sedek also pointed to signals from the US Federal Reserve as another factor supporting the dollar. He said the minutes of the Federal Open Market Committee’s December meeting suggested a more guarded approach to interest rate cuts.
“The minutes revealed a divided committee, with most participants signalling that further rate cuts should be paused unless inflation continues to ease, while some argued for keeping rates unchanged for a prolonged period after three cuts in 2025,” he said.
“This more cautious US Federal Reserve stance has lifted US yield expectations, wideing rate differentials and adding further pressure on the ringgit,” he added.
Against other major currencies, the ringgit also traded lower at the open. It weakened against the Japanese yen to 2.5845/5911 from 2.5817/5848 last Friday, slipped slightly versus the British pound to 5.4527/4662 from 5.4509/4569, and eased against the euro to 4.7499/7616 from 4.7488/7540.
Performance against regional peers was mixed. The ringgit weakened against the Singapore dollar to 3.1506/1586 from 3.1502/1540 and declined versus the Philippine peso to 6.89/6.91 from 6.88/6.89.
However, it strengthened against the Thai baht to 12.8662/9073 from 12.8996/9201 and was little changed against the Indonesian rupiah at 242.6/243.3 from 242.2/242.6 previously. - January 5, 2025
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