Ringgit continues climb against US dollar for 10th day straight, up 30 points at market opening
KUALA LUMPUR, Aug 2 — The ringgit opens higher against the US dollar today, continuing its 10-day rally as investors anticipate possible Federal Reserve (Fed) rate cuts in September.
At 8 am, the ringgit marginally increased by 30 basis points to 4.5645/5725 against the greenback from yesterday's close of 4.5675/5710.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the United States (US) Institute for Supply Management (ISM) index for the manufacturing sector fell to 46.8 points in July, lower than the consensus estimate of 48.8 points.
He said respondents to the ISM survey suggested that consumer demands are slowing, and some businesses are focusing on reducing their inventories.
"Claims for jobless insurance in the US were also rising to 249,000 last week from 235,000 previously, suggesting that the labour market is weakening.
"These (indicators) seem to support the view that the Fed would cut the rates in September as it needs to ensure the economy would be able to achieve a soft landing in growth after maintaining a restrictive monetary policy stance for quite some time,” he told Bernama.
Mohd Afzanizam also said the ringgit looks constructive versus the US dollar as the rate differential is likely to narrow between the federal funds rate and the overnight policy rate.
"After experiencing a sharp appreciation against the greenback, we still feel that the ringgit is undervalued and, therefore, the upside potential is still very much visible.
"However, the temptation among the traders to lock in gains would result in some correction in the ringgit in the immediate terms," he said.
On that note, the ringgit would linger around 4.56 to 4.57, he added.
Meanwhile, the local note traded mostly lower against a basket of major currencies and mostly higher against Asean currencies.
The ringgit rose against the British pound to 5.8088/8190 from 5.8272/8317 at yesterday's close but depreciated against the euro to 4.9233/9319 from 4.9229/9266 and fell against the Japanese yen to 3.0597/0655 from 3.0450/0475 at yesterday’s close.
Among Asean currencies, the ringgit inched up against the Indonesian rupiah to 281.0/281.7 from 281.2/281.6 yesterday and edged up against the Philippine peso to 7.82/7.84 from 7.83/7.84.
The local currency improved vis-a-vis the Thai baht to 12.8216/8513 from 12.8239/8384 previously but was lower against the Singapore dollar to 3.4145/4207 from 3.4124/4153 at the close yesterday. — Bernama
Malay Mail
