The People’s Bank of China (PBoC) unexpectedly slashed the one-year medium-term lending facility (MLF) rate by 15 basis points to 2.5% from 2.65% today.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said the surprising rate cut, the second reduction this year, signals the PBoC’s commitment to provide support for China’s economic growth.

“The Chinese yuan and ringgit are closely correlated. Therefore, any weakening of the yuan will have a direct bearing on the ringgit.

“We have seen the dollar-ringgit pair depreciating to RM4.6335,” he told Bernama.

At 6pm, the local note fell to 4.6335/4.6385 against the US dollar compared with 4.6140/4.6175 yesterday.

The ringgit was traded mostly lower against a basket of major currencies.

It rose against the Japanese yen to 3.1830/3.1867 from 3.1832/3.1858 yesterday, fell vis-a-vis the British pound to 5.8966/5.9030 from 5.8575/5.8619 and was easier versus the euro to 5.0690/5.0745 from 5.0519/5.0557 previously.

The local unit was traded mostly lower against other Asean currencies.

The ringgit inched up against the Thai baht at 13.0908/13.1105 from 13.1173/13.1332 yesterday but slid against the Philippine peso to 8.15/8.16 from 8.11/8.13.

It was lower vis-a-vis the Singapore dollar to 3.4155/3.4197 from 3.4064/3.4095 at Monday’s close and declined versus the Indonesian rupiah to 301.9/302.4 from 301.2/301.6 previously.