Ringgit opens higher against greenback amid dismal US data

KUALA LUMPUR: The ringgit opened higher against the US dollar as the greenback retreated following dismal US economic data, prompting fears, that growth in the world’s largest economy was slowing down.

At 9am, the ringgit traded at 4.1380/1500 versus the US dollar from 4.1410/1460 at Wednesday’s closing.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the fall in the US Institute for Supply Management (ISM) Index and the earnings guidance from Apple was the main market moving news.

The US ISM Index for the manufacturing sector fell 5.2 points to 54.5 in December, signalling manufacturers have become less optimistic, while more importantly, there was a steep fall in the December New Orders Index by 11 points to 51.1 points.

“This suggests production activities and demand are expected to be weak in the months ahead,” he added.

He said Apple had lowered its revenue guidance for first quarter, an indication that demand from China had weakened considerably, in line with the country’s slowing economy in 2018.

“Therefore, emerging market asset performance is expected to be very challenging, as risk aversion would intensify. Moving forward, there will be continued demand for safe haven currencies such as the US dollar and Japanese yen.

“At this juncture, the US dollar has been depreciating at a very gradual pace. We expect ringgit to be range bound in the near term,” he told Bernama.

At the opening bell, the ringgit traded lower against other major currencies.

It fell against the Japanese yen to 3.8461/8509 from 3.8457/8514 on Thursday and was lower against the Singapore dollar at 3.0342/0382 from 3.0321/0369.

The ringgit slipped versus the pound to 5.2300/2367 from 5.2090/2173 and depreciated vis-a-vis the euro to 4.7202/7260 from 4.7104/7165.