KUALA LUMPUR – The ringgit slipped in early trade today as the greenback gained strength ahead of the US Federal Reserve (Fed) meeting in the middle of this week on interest rates.
At 9.05am, the ringgit stood at 4.2450/2500 against the greenback compared with 4.2410/2460 at yesterday’s close.
SPI Asset Management managing partner Stephen Innes said although most market participants anticipate that the Fed will slow its pace of tightening to a 25 basis points rate hike, a “great debate” has continued on whether the American central bank will signal that there is a long way to go in the rate upcycle.
This, he said, has dampened sentiment with investors “unwilling to fix their wagons to bulls” ahead of the US meeting.
“Risky assets, like the ringgit, have benefited greatly from the China reopening theme and a drop in US inflation but concerns the Fed may not play ball and keep rates higher despite falling US inflation has traders reducing some risks.
“We are hitting the upper band of my weekly ranges, where I expected exporters to sell at the 4.2475-4.2500 level. I don’t think the market will move above 4.2525 after the positive holiday data from China over the Lunar New Year holiday,” he said.
The US central bank meeting will take place from today until tomorrow. Bank of England and European Central Bank meetings are scheduled on February 2.
At home, the ringgit traded higher against a basket of major currencies.
The local note appreciated against the Singapore dollar to 3.2306/2346 from 3.2315/2358 yesterday and rose vis-a-vis the British pound to 5.2472/2534 from 5.2571/2633.
It strengthened against the euro to 4.6071/6125 from 4.6257/6311 and improved against the Japanese yen at 3.2584/2627 from 3.2638/2679 at the end of yesterday. – Bernama, January 31, 2023
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