KUALA LUMPUR – The ringgit opened marginally lower against the US dollar today due to the lack of demand despite the lower US dollar index (DXY), said an analyst.
At 9am, the local note eased to 4.6190/6240 against the greenback from yesterday’s close of 4.6115/6185.
Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said the United States’ headline consumer price index (CPI) for May came in lower than expected, proving that the US inflation rate is steadily declining.
“This suggests that the US Federal Reserve (Fed) has demonstrated its credibility in bringing down inflation after raising the policy rate by 500 basis points since March last year.
“Perhaps it is time for the Fed to take stock of their past action and allow the inflation rate to edge lower without having to resort to further monetary tightening,” he said.
Noting that the DXY declined by 0.3% to 103.33 points, he said the ringgit might get a boost from the US’ lower inflation rate as the Fed might take a break from the policy rate hike during the Federal Open Market Committee meeting later tonight.
“Technical indicators all suggest that the ringgit is in an oversold condition against the US dollar, so I can see the ringgit appreciating today,” said Afzanizam.
The US headline CPI eased to 4.0% year-on-year (y-o-y) in May 2023, lower than the consensus estimates of 4.1%.
Similarly, the core CPI moderated further to 5.3% during the month from 5.5% in May 2022.
Meanwhile, the ringgit traded mostly lower against a basket of major currencies.
It fell versus the British pound to 5.8246/8309 from yesterday’s closing of 5.7953/8041 and dropped vis-a-vis the euro to 4.9839/9893 from 4.9823/9898 yesterday, but advanced against the Japanese yen to 3.2983/3021 from 3.3043/3096 previously.
The local note was also traded mostly lower against other Asean currencies.
The ringgit decreased against the Singapore dollar to 3.4411/4453 from 3.4399/4454 yesterday, eased versus the Indonesian rupiah to 310.7/311.2 compared with 310.2/310.8 yesterday, and slid against the Philippines’ peso to 8.26/8.28 from 8.24/8.26 previously.
However, the local unit rose against the Thai baht to 13.3155/3368 from 13.3442/3699 yesterday. – Bernama, June 14, 2023
