KUALA LUMPUR: The ringgit opened higher against the US dollar as rising global crude oil prices bolstered the local note, amid early morning announcements by the US Federal Reserve (Fed) that it is keeping the interest rates unchanged.
At 9am, the local unit increased to 4.3300/3400 versus the greenback from 4.3450/3500 at yesterday’s close.
Meanwhile, the international benchmark Brent Crude was up 4.61% to US$23.56 a barrel when energy traders speculated crude demand will continue to improve as global production levels are forced lower with storage capacity running out.
Oanda Senior Market Analyst, Edward Moya said the Fed would keep interest rates unchanged until they are confident the US economy has bounced back.
Moya said the Fed will also rely on health experts in determining the outlook and that prevented them from giving any additional guidance today.
“Fed Chair Jerome Powell pretty much signalled they are not done stimulating the economy since pandemic risks will persist throughout next year at the very least,” he said.
Moya said the greenback extended its declines after the Fed said it will expand stimulus measures if further support is required.
“The Fed’s smorgasbord of stimulus throughout this coronavirus pandemic has set the table for an eventually much weaker US dollar,” he said.
AxiCorp Chief Global Markets Strategist Stephen Innes said with the Covid-19 infections curve flattening in Malaysia, oil prices are pushing higher, and the Federal Open Market Committee, which executes monetary policy for the Fed, is committed to monetising debt, a well-received indication for Malaysia.
“Global risk sentiment is blossoming, and all of which should provide favourable tailwinds for the ringgit,” said Innes.
At the opening, the local unit traded higher against other major currencies.
It appreciated against the Singapore dollar to 3.0653/0739 from 3.0720/0757 at yesterday’s close and strengthened against the yen to 4.0551/0652 from 4.0790/0849.
Vis-a-vis the pound, the ringgit rose to 5.3870/4003 from 5.3948/3023 while against the euro, it improved to 4.7019/7132 from 4.7165/7228 yesterday.