Ringgit rises 0.35% against the US dollar at opening

Ambank says the United States is open to a possible rate cut later in the year, despite keeping its interest rate steady.

KUALA LUMPUR: The ringgit rose 0.35% against the US dollar, in line with regional peers after the US Federal Reserve (US Fed), as expected, kept its interest rate steady yesterday.

At 9am, the ringgit was at 4.1575/1605 against the greenback from 4.1720/1750 at Wednesday’s close.

Ambank in its economic report today said, despite holding the rates, for now, the US Fed nevertheless is open to a possible rate cut later in the year.

“It is likely that the US Fed would cut rates as soon as July, supported by three key factors, they are inflation, growth and its economic outlook,” it said.

Yesterday, following a two-day policy meeting the US Fed announced it would hold the interest rates steady between 2.25% and 2.5%, but signalled that it was ready to cut rates if uncertainty and the economic outlook are on the gloomy side.

According to a dealer, investors’ sentiment has been on the rise with several multinationals planning to use Malaysia as its production base.

“This has boosted the ringgit for now. Coupled with stronger economic policies and incentives to attract foreign direct investment (FDI), the ringgit has a bright chance to trade higher against the US dollar this week,” he said to Bernama.

It was reported that Apple an American technology giant is preparing to move its production capacity from China to Southeast Asia as part of the restructuring of its supply chain.

Meanwhile, the ringgit traded lower against a basket of major currencies.

The local currency weakened to 5.2705/2747 from 5.2459/2505 against the pound yesterday and fell against the Singapore dollar to 3.0543/0576 from 3.0508/0535 previously.

The ringgit was also lower against the yen at 3.8621/8659 from 3.8476/8515 while against the euro, the local currency slid to 4.6797/6847 from 4.6731/6781 yesterday.