KUALA LUMPUR – The ringgit extended its uptrend against the US dollar this morning in anticipation of softer interest rate hikes in the United States, after the latest US inflation data showed a declining trend.
At 9am, the local note rose to 4.4795/4835 versus the greenback from yesterday’s closing rate of 4.4820/4860.
ActivTrades trader Dyogenes Rodrigues Diniz said the US consumer price index (CPI) reading for February was exactly as expected at 6%, below January’s reading of 6.4%.
“This suggests that inflation in the US is slowing down at the moment, thus the Federal Reserve may adopt a milder stance regarding the next interest rate decision on March 22,” he said.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist and social finance, Mohd Afzanizam Abdul Rashid opined that the latest inflation print left the Fed in a pickle.
“On one hand, their concerns over stubbornly high inflation would mean they need to do more in raising the Fed Fund Rate.
“On the other spectrum, the heightening concern over the US banks such as Silicon Valley Bank as well as Signature Bank serves as a reminder that overly tight monetary policy could do more harm than good,” he said.
As such, he said the ringgit is likely to experience some form of correction today after staging a strong rebound in the past two days.
Meanwhile, the local note traded mostly higher against a basket of major currencies.
It improved versus the British pound to 5.4444/4492 from 5.4474/4523 at yesterday’s close and firmed against the Japanese yen to 3.3320/3352 from 3.3383/3415 yesterday, but fell vis-a-vis the euro to 4.8078/8121 from 4.8007/8050 previously.
At the same time, it was also traded mixed against its Asean counterparts.
The ringgit rose against the Thai baht to 12.9728/12.9896 from 12.9830/9999 yesterday and gained vis-a-vis the Indonesian rupiah to 291.10/291.50 from 291.20/291.70, but depreciated versus the Singapore dollar to 3.3285/3317 from 3.3254/3286 previously, and was unchanged vis-a-vis the Philippine peso at 8.13/8.14.
Bursa Malaysia rebounded to open higher today, taking its positive cue from Wall Street's performance overnight as traders are betting that the aftermath of the recent bank failures in the US may have been averted, said an analyst.
At 9.10am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) rose 10.37 points to 1,404.20 from yesterday’s close of 1,393.83.
The key index opened 6.27 points better at 1,400.10.
Market breadth was positive with gainers trumping decliners 335 to 97, while 196 counters were unchanged, 1,620 untraded and 10 others suspended.
Turnover amounted to 423.36 million units worth RM248.51 million.
Rakuten Trade Sdn Bhd’s vice-president of Equity Research, Thong Pak Leng said that the latest US CPI data came in within expectations, which suggests that the Fed may be less aggressive with a rate hike.
He noted that the Dow Jones Industrial Average jumped 336 points, while the Nasdaq added 239 points with the US Treasury 10-year yield edging higher at 3.69%.
“On the home front, the FBM KLCI dipped below the 1,400-level due to broad-based selling amidst the regional bloodbath which was a knee-jerk reaction to the bank failures in the US.
“Nonetheless, we reckon bargain-hunting to emerge today on hopes that the Fed will be less reluctant to hike rates. Thus, we expect buying to return to the banks and telecommunication stocks today," he said.
Thong also anticipates the index to see a rebound today and expects it to hover in the 1,400 to 1,415 range.
Among Bursa Malaysia heavyweights, Maybank and TNB gained six sen each to RM8.40 and RM9.33, respectively, Public Bank improved seven sen to RM3.95 and CIMB widened five sen to RM5.22, but Petronas Chemicals inched down by one sen to RM6.94.
Among the actives, ACE Market debutant Oppstar jumped RM1.49 to RM2.12, Hong Seng Consolidated increased half-a-sen to 15 sen, Destini added half-a-sen to eight sen, Jade Marvel edged up 1.5 sen to 31 sen and BSL eased half-a-sen to 4.5 sen.
On the index board, the FBM Emas Index was 80.77 points higher at 10,262.68, the FBM 70 Index swelled 110.99 points to 13,178.60, the FBMT 100 Index was 75.98 points stronger at 9,954.75, the FBM Emas Shariah Index added 65.54 points to 10,547.69, and the FBM ACE Index expanded 49.21 points to 5,226.09.
Sector-wise, the Financial Services Index ballooned 134.31 points to 15,513.54, the Energy Index pushed up 9.49 points to 833.77, the Industrial Products and Services Index inched up 1.40 points to 169.93, and the Plantation Index garnered 33.94 points to 6,701.24. – Bernama, March 15, 2023
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