KUALA LUMPUR – The ringgit ended lower against the US dollar today as the greenback’s safe-haven currency appeal continued to strengthen amid risk-off sentiment in the market, an analyst said.
At 6pm, the local currency fell to 4.6480/6520 against the US dollar from yesterday’s close of 4.6345/6390.
SPI Asset Management managing partner Stephen Innes said the 10-year US Treasury yield rose two basis points to 3.84% as the markets awaited the release of the US jobs report that could give signs of inflation and future Federal Reserve (Fed) policy.
“US yields and continued hawkish rhetoric from the Fed have seen a sharp bounce back higher for the US dollar heading into tonight’s US jobs report.
“Data points from the US remain solid as investors are hedging by staying long on the US dollar ahead of the US non-farm payrolls report,” he said.
Today, Chicago Fed president Charles Evans said that the US benchmark rate will probably be at 4.50-4.75% by next spring as officials fret over high core inflation.
Meanwhile, Evans said signs that the labour market is strengthening should quieten any Fed pivot talk for now and the ringgit would be particularly vulnerable in that scenario.
He explained that if US economic data is strong given a robust US non-farm payrolls number, the market would think the Federal Open Market Committee needs to put interest rates higher for longer to push back core inflation.
“Higher US interest rates are bad for the ringgit but if they stay high longer, it would push out expectations for a ringgit recovery,” Innes said.
Meanwhile, the ringgit traded mixed against a basket of major currencies.
The local note rose against the British pound to 5.2132/2177 from 5.2231/2282 at yesterday’s close and appreciated vis-à-vis the euro to 4.5574/5613 from 4.5821/5866 yesterday.
However, it eased versus the Singapore dollar to 3.2529/2559 from 3.2518/2552 yesterday and depreciated against the Japanese yen to 3.2084/2116 from 3.2033/2066 previously. – Bernama, October 7, 2022
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