KUALA LUMPUR: A series of major central bank meetings this week, starting with the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) tomorrow, is likely to keep the risk appetite for the ringgit down.
Bank Muamalat Malaysia Bhd chief economist and social finance head Afzanizam Rashid said most economists are expecting a 25-basis-point (bps) increase in US interest rates. Similarly, the European Central Bank is expected to do the same, he told Bernama.
However, he said, the Bank of Japan is likely to keep its excessive monetary policy accommodation, particularly the yield curve control (YCC), steady when it meets this Friday and Saturday, Afzanizam added.
The YCC is a central bank’s monetary policy strategy to target and manage specific yields or interest rates on government bonds.
The ringgit extended its downtrend from last week to open at 4.5670/4.5710 against the US dollar from 4.5600/4.5655 at the close last Friday.
However, Afzanizam said the market has already priced in any possibility of a hike from the FOMC meeting. “Therefore the impact on the ringgit will not be significant,” he added.
“We should see demand for the US dollar firming up and expect the USD/MYR to move between RM4.56 to RM4.57 today,” he said.
Meanwhile, the ringgit also turned weaker against a basket of major currencies.
It decreased vis-a-vis the euro to 5.0826/5.0871 from 5.0735/5.0796 at Friday’s close, slipped versus the Japanese yen to 3.2235/3.2267 from 3.2185/3.2229 and slid against the British pound to 5.8745/5.8797 from 5.8669/5.8740 previously.
Similarly, the local note also traded lower against other Asean currencies.
The ringgit depreciated versus the Singapore dollar to 3.4328/3.4363 from 3.4304/3.4350 on Friday, fell vis-a-vis the Philippines’ peso to 8.34/8.36 from 8.33/8.34, eased against the Indonesian rupiah to 303.8/304.3 from 303.4/303.9, and decreased against the Thai baht to 13.2434/13.2608 from 13.2327/13.2541 previously.