KUALA LUMPUR: The ringgit opened marginally lower against the US dollar today due to the lack of demand despite the lower US dollar index (DXY), said an analyst.
At 9 am, the local note eased to 4.6190/6240 versus the greenback from Tuesday’s close of 4.6115/6185.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the United States’ (US) headline consumer price index (CPI) for May came in lower than expected, proving that the US’ inflation rate is steadily declining.
“This suggests that the US Federal Reserve (Fed) has demonstrated its credibility in bringing down inflation after raising the policy rate by 500 basis points since March last year.
“Perhaps, it is time for the Fed to take stock of their past action and allow the inflation rate to edge lower without having to resort to further monetary tightening,” he told Bernama.
Noting that the DXY declined by 0.3 per cent to 103.33 points, he said the ringgit might get a boost from the US’ lower inflation rate as the Fed might take a break from the policy rate hike during the Federal Open Market Committee (FOMC) meeting later tonight.
“Technical indicators all suggest that the ringgit is in the oversold condition against the US dollar, so e could see ringgit appreciating today,” said Mohd Afzanizam.
The US headline CPI eased to 4.0 per cent year-on-year (y-o-y) in May 2023, lower than the consensus estimates of 4.1 per cent.
Similarly, the core CPI moderated further to 5.3 per cent during the month from 5.5 per cent in May 2022.
Meanwhile, the ringgit traded mostly lower against a basket of major currencies.
It fell versus the British pound to 5.8246/8309 from Tuesday’s closing of 5.7953/8041 and dropped vis-a-vis the euro to 4.9839/9893 from 4.9823/9898 yesterday, but advanced against the Japanese yen to 3.2983/3021 from 3.3043/3096 previously.
The local note was also traded mostly lower against other Asean currencies.
The ringgit decreased against the Singapore dollar to 3.4411/4453 from 3.4399/4454 on Tuesday, eased versus the Indonesian rupiah to 310.7/311.2 compared with 310.2/310.8 yesterday and slid against the Philippines’ peso to 8.26/8.28 from 8.24/8.26 previously.
However, the local unit rose against the Thai baht to 13.3155/3368 from 13.3442/3699 yesterday.
US dollar weakens
Meanwhile, Xinhua reported the US dollar weakened as data showed inflation has been cut in half from last year’s peak, while a searing British jobs report lifted the pound.
The dollar index, which measures the greenback against six major peers, decreased 0.30 per cent at 103.3370 in late trading.
The US consumer price index (CPI) in May rose 4 per cent from a year earlier, the US Bureau of Labour Statistics said Tuesday, well below the recent peak of 9.1 per cent last June and down from April’s 4.9 per cent increase.
US Treasury yields fell immediately after the latest CPI report but quickly bounced back, reflecting little change in investors’ interest rate expectations beyond this week’s Federal Reserve (Fed) meeting.
It is expected that the Fed will skip a rate hike during its two-day meeting starting Tuesday, but the possibility of a resumption of rate hikes in July cannot be ruled out. US stock futures extended gains on Tuesday.
In late New York trading, the euro increased to US$1.0790 from US$1.0756 in the previous session, and the British pound rose to US$1.2602 from US$1.2505 in the previous session.
Employment in the United Kingdom hit a record 33.1 million between February and April, with increases in both the numbers of employees and self-employed workers, Britain’s Office for National Statistics said Tuesday.
The Canadian dollar strengthened to a four-month high against its US counterpart on Tuesday as oil prices climbed and US inflation data bolstered bets for a pause in the Fed’s interest rate hiking campaign.
The US dollar fell to 1.3311 Canadian dollars from 1.3371 Canadian dollars in late trading.
The US dollar bought 140.2840 Japanese yen, higher than 139.5750 Japanese yen of the previous session. The US dollar decreased to 0.9059 Swiss francs from 0.9096 Swiss francs. The US dollar fell to 10.7138 Swedish Krona from 10.8117 Swedish Krona.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies on June 14:
1 USD 4.6190/6240
100 yen 3.2983/3021
1 pound 5.8246/8309
1 euro 4.9839/9893
1 SGD 3.4411/4453
100 baht 13.3155/3368
1 mln rupiah 310.7/311.2
100 pesos 8.26/8.28
Short-term rates
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 RM48.06 billion in the conventional system and RM30.46 billion in Islamic funds.
Today, the central bank will conduct a RM1 billion conventional money market tender for seven days and two Commodity Murabahah Programme (CMP) tenders, comprising a RM150 million tender for seven days and RM100 million tender for 14 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 RM46.1 billion conventional overnight tender and RM29.2 billion for Murabahah overnight tender.
Gold price
The physical price of gold as at 9.30 am stood at RM279.72 per gramme, down RM2.26 from RM281.98 at 5.00 pm yesterday.
Xihua reported that gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as US inflation data is in line with market expectations, reported Xinhua.
The most active gold contract for August delivery fell US$11.10, or 0.56 per cent, to close at US$1,958.60 per ounce.
The US Labour Department reported Tuesday that the US consumer price index (CPI) increased just 0.1 per cent in May and 4 per cent from a year ago, the lowest level in about two years. Excluding food and energy, core CPI rose 0.4 per cent and 5.3 per cent, respectively.
With all the numbers in line with market estimates, traders are pricing in a nearly 100-per cent chance that the Federal Reserve will not raise interest rates on Wednesday.
The National Federation of Independent Business (NFIB) reported Tuesday that its Small Business Optimism Index rose 0.4 points to 89.4 in May. It was the 17th straight month that the index stayed below the 49-year average of 98.
Investors are waiting for the results of the Federal Open Market Committee (FOMC) meeting on Wednesday.
Silver for July delivery fell 23.70 cents, or 0.99 per cent, to close at US$23.822 per ounce. Platinum for July delivery fell US$13.40, or 1.35 per cent, to close at US$981.90 per ounce. – BERNAMA
