KUALA LUMPUR: Expectations of a less hawkish stance by the US Federal Reserve come next week has given the ringgit a boost.
The local note opened the day higher at 4.2510/4.2600 compared with yesterday’s close of 4.2575/4.2625.
The market speculation is that the Fed’s open market committee will likely go for a lower than expected interest rate hike of 25 basis points (bps) when it meets next week, an analyst said. Every indicator was pointing to a 50bps increase earlier.
Asia foreign exchange (forex) is likely to benefit as the broader forex market positions itself for a lower increase in US interest rate on the back of another run of the US dollar weakness in G10 currencies, according to SPI Asset Management managing partner Stephen Innes.
“On another note, the China market continues to lead the horse race, and this is supporting regional risk markets,” he told Bernama.
“As such, local forex vendors are pricing in a strong ringgit on the expected return of Chinese travellers and continued improvement in international travel,” he added.
ActivTrades trader Dyogenes Rodrigues Diniz said Malaysia has been showing solid numbers with the unemployment rate at 3.6% and inflation under control at 3.8%, which supports the outlook for the local market as a good destination for foreign investment.
“From a technical standpoint, US dollar/ringgit is approaching an important support region at 4.2400. If the price manages to break this support, it can drop to 4.1700, where it should find a more important support,” he said.
Meanwhile, the ringgit traded lower against a basket of major currencies.
The local note depreciated against the Singapore dollar to 3.2371/3.2442 from 3.2352/3.2392 at yesterday’s close and declined vis-a-vis the British pound to 5.2734/5.2845 from 5.2418/5.2480 previously.
It also slid versus the euro to 4.6400/4.6498 from 4.6322/4.6376 yesterday and fell against the Japanese yen to 3.2892/3.2964 from 3.2790/3.2831.