KUALA LUMPUR: The ringgit extended its gains to open higher this morning, amidst positive developments in the Asian foreign exchange (forex) market.
Risk appetites improved after Malaysia and China’s central banks moved to stop the slide in their respective currencies, dealers said.
At 9 am, the local unit rose to 4.6570/6625 versus the greenback compared to 4.6640/6685 at Tuesday’s close.
SPI Asset Management managing director Stephen Innes said the ringgit is expected to trade on a weaker bias today due to the stronger-than-expected US jobs claims which support an interest rate hike in July and possibly beyond. He reckons that foreign exchange (FX) traders are trying to determine how much further rates would need to rise in each “jurisdiction.”
“However, with the US Federal Reserve (Fed) chairman Jerome Powell talking tough on inflation last Wednesday, hinting at multiple interest rate increases ahead and possibly at an aggressive pace, the dollar is clawing back lost ground from earlier this week.
“Traders are positioning for the Fed’s preferred inflation (gauge), the US personal consumption expenditures (PCE) report to be released later tonight. If inflation remains slow to normalise that too will strengthen the dollar,” he told Bernama.
Meanwhile, the ringgit was traded higher against a basket of major currencies.
It rose vis-a-vis the euro to 5.0928/0994 from 5.1128/1166 at Wednesday’s close, strengthened against the Japanese yen to 3.2338/2382 from 3.2427/2454 and increased versus the British pound to 5.9101/9177 from 5.9292/9336 previously.
However, the local note was traded mixed against other Asean currencies.
The ringgit inched up against the Singapore dollar to 3.4549/4599 versus 3.4550/4581 on Wednesday and improved to 8.43/8.46 against the Philippines’ peso from 8.45/8.46.
It fell versus the Indonesian rupiah at 312.3/312.9 from 311.4/311.9 and slipped against the Thai baht to 13.1382/1606 from 13.1054/1211 on Wednesday.
US dollar loses
The US dollar strengthened on Thursday with support from a strong US GDP reading and less-than-expected unemployment claims, reported Xinhua.
The dollar index, which measures the greenback against six major peers, increased 0.42 per cent to 103.3432 in late trading, climbing to a two-week high.
The US economy grew at an annualised pace of 2 per cent in the first quarter, significantly better than the previous estimate of 1.3 per cent, according to data issued by the US Bureau of Economic Analysis on Thursday morning.
Meanwhile, US weekly initial jobless claims last week decreased by 26,000 to a seasonally adjusted 239,000, the largest drop in 20 months and below the expectation of 265,000 by economists polled by Reuters.
After the report, the yield of US 2-year Treasury notes hit its highest level since March 8, rising 16 basis points to 4.882 per cent. The yield of the 10-year Treasury bonds rose by 13.44 basis points and closed at 3.846 per cent, the highest since early March.
Speaking at an event held by the Spanish central bank on Thursday, Federal Reserve Chairman Powell indicated that the Fed is likely to resume its rate hike path after a pause earlier this month.
In addition, Atlanta Federal Reserve President Raphael Bostic said on Thursday that the Fed will have to increase rates if price growth moves away from target, or inflation expectations start to move in “a difficult way.”
In late New York trading, the euro fell to US$1.0867 from US$1.0922 in the previous session, and the British pound was down to US$1.2613 from US$1.2648 in the previous session.
The US dollar bought 144.8870 Japanese yen, higher than 144.3170 Japanese yen of the previous session. The US dollar rose to 0.8999 Swiss franc from 0.8965 Swiss franc, and it decreased to 1.3243 Canadian dollars from 1.3254 Canadian dollars. The US dollar was up to 10.8615 Swedish Krona from 10.7726 Swedish Krona.
Short-term rates to remain stable
Short-term rates are expected to remain stable today on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the financial system.
Liquidity is estimated at RM46.83 billion in the conventional system and RM32.23 billion in Islamic funds.
Today, the central bank will conduct a RM2 billion conventional money market tender for seven days and two reverse repo tenders, comprising a RM1 billion tender for 31 days as well as a RM500 million tender for 91 days.
BNM will also call for three Qard tenders consisting of a RM900 million tender for seven days, a RM500 million tender for 14 days and a RM1.4 billion tender for 21 days.
The central bank also announced the availability of reverse repo, sale and buy-back agreements as well as Collateralised Commodity Murabahah facilities for tenors of one to three months.
At 4 pm, BNM will conduct up to a RM46.3 billion conventional overnight tender and a RM29.4 billion Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6835/6895
100 yen 3.2338/2382
1 pound 5.9101/9177
1 euro 5.0928/0994
1 SGD 3.4549/4599
100 baht 13.1382/1606
1 mln rupiah 312.3/312.9
100 pesos 8.43/8.46
Gold up
The physical price of gold as at 9.30 am stood at RM277.60 per gramme, up three sen from RM277.57 at 5 pm Wednesday. – BERNAMA
