KUALA LUMPUR: The ringgit closed higher against the US dollar today as the greenback weakened due to improving US inflation signals, said an analyst.
According to him, the greenback could be headed for a monthly decline due to expectations that the Federal Reserve’s aggressive rate-hike cycle may conclude after last week’s 25 basis-point increase in the federal funds rate (FFR).
He said this is due to last week’s data which indicated that the annual US inflation rate rose at its slowest pace in more than two years in June.
This, he noted, will reduce pressure on the Federal Open Market Committee (FOMC) to continue raising FFR rates.
“In the near term, the dollar might continue on a downtrend mode, weighed by market view that the FOMC is done with its (rate) tightening cycle,” he said.
At 6pm, the local note strengthened to 4.5050/4.5090 against the US dollar compared with 4.5535/4.5565 at Friday’s close.
Meanwhile, the ringgit traded higher against a basket of major currencies.
It increased against the Japanese yen to 3.1658/3.1689 from 3.2691/3.2715 last Friday, firmed versus the euro to 4.9690/4.9734 from 4.9966/4.9998 and improved vis-a-vis the British pound to 5.7916/5.7968 from 5.8362/5.8401 previously.
At the same time, the local unit traded higher against other Asean currencies.
The ringgit rose versus the Singapore dollar to 3.3877/3.3910 from 3.4183/3.4208 at the close on Friday and went up vis-a-vis the Philippine peso to 8.20/8.22 from 8.29/8.31 previously.
The local unit appreciated against the Indonesian rupiah to 298.6/299.1 from 301.4/301.8 last Friday and was higher against the Thai baht at 13.1594/1765 from 13.2058/2218 previously.