Ringgit opens marginally higher against US dollar

KUALA LUMPUR: The ringgit opened marginally higher against the US dollar in the early session on optimism of an interim trade deal between the United States and China.

An analyst said the hope of a trade deal between two giant economies continues to resonate in the forex market.

The ringgit was at 4.0880/0930 versus the US dollar compared with Tuesday’s close of 4.0890/0920.

The market was closed on Wednesday for New Year’s Day.

The greenback continued to be under pressure as investors bet the US economic outperformance could come to an end as optimism on the trade deal, which brightens the outlook for growth globally.

“The positive trade deal signal pushes the US dollar trade lower since December 2019,” he said.

Meanwhile, AxiTrader chief Asia market strategist Stephen Innes said the People’s Bank of China’s (PBoC) stimulatory efforts has given Malaysia’s close trade ties with China a boost.

“With this added plus, it should play out favourably for the ringgit,” he said.

Yesterday, the PBoC announced it would lower the bank’s Required Reserve Ratio by 50 basis points, effective Jan 6, to release 800 billion yuan in base money liquidity and reduce the bank’s funding costs by 15 billion yuan per year, which will help lower the financing costs of the real economy.

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

It declined against the Singapore dollar to 3.0392/0438 from Tuesday’s close of 3.0383/0415 but rose against the Japanese yen to 3.7601/7658 from 3.7645/7683.

The local currency slipped against the British pound to 5.4195/4265 from 5.3795/3855 and depreciated against the euro to 4.5859/5932 from 4.5850/5888.