KUALA LUMPUR: The ringgit opened slightly lower against the US dollar this morning after the US Federal Reserve (Fed) decided to pause rate hikes.
At 9 am, the local note slid to 4.6890/6935 against the greenback from yesterday’s close of 4.6840/6880.
Last night, the US Fed decided to keep the rate steady at between 5.25 per cent and 5.50 per cent. However, Fed chair Jerome Powell stressed that they will be ready to raise rates further if this is needed to cool inflation.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said despite the Federal Open Market Committee keeping interest rates unchanged, the accompanying statement from Powell leaned pretty much to hawkish side as they commit to bring down inflation down to a two per cent target.
“In light of the hawkish stance, the US Dollar is expected to be a highly sought after currency,” he told Bernama.
Meanwhile, the ringgit was traded higher against a basket of major currencies.
It increased against the Japanese yen to 3.1595/1627 from 3.1653/1682 at Wednesday’s close and was up against the euro to 4.9853/9901 from 5.0114/0157 previously and rose versus the British pound at 5.7731/7786 from 5.7955/8005 yesterday.
The local note traded mixed against other Asean currencies.
It appreciated vis-à-vis the Singapore dollar to 3.4281/4317 from 3.4348/4382 at yesterday’s close and strengthened versus the Thai baht to 12.9120/9298 from 12.9891/13.0056 previously.
However, it was slightly lower against the Indonesian rupiah at 304.8/305.2 from 304.5/304.9 on Wednesday and was flat against the Philippine peso at 8.24/8.26 yesterday.
US dollar ticks down
The US dollar ended nearly flat in late trading on Wednesday, after the Federal Reserve kept its benchmark lending rate unchanged at a two-decade high, but suggested that at least one more increase is likely this year as inflation remains elevated, reported Xinhua.
The dollar index, which measures the greenback against six major peers, fell 0.03 per cent to 105.1252 in late trading.
As anticipated, the Federal Open Market Committee held its key policy rate on Wednesday at between 5.25 per cent and 5.5 per cent, the highest in 22 years.
“In determining the extent of additional policy firming that may be appropriate to return inflation to two per cent over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the Fed said in a statement.
According to Fed Chair Jerome Powell at a news conference Wednesday afternoon: “Growth in real GDP has come in above expectations. Consumer spending remains particularly robust. Labour supply and demand continue to come into better balance.”
He argued that the “Fed projections are not a plan, policy will adjust as appropriate”, and “be prepared to raise rates further if appropriate”.
Fed’s upward revision of 2024 interest rates from 4.6 per cent to 5.1 per cent halted the US dollar’s fall. The Fed’s new summary of economic projections now calls for GDP stronger growth of 2.1 per cent this year, more than double its prior forecast, with the forecast for unemployment coming down to 3.9 per cent from a prior estimate of 4.1 per cent.
CME Group’s FedWatch now suggests a 29.1 per cent chance that the Fed will lift the rate by 25 basis points, to between 5.5 per cent to 5.75 per cent at its next policy meeting in November, with the odds for a December hike pegged at 36.4 per cent.
In late New York trading, the euro was up to US$1.0686 from US$1.0677 in the previous session, and the British pound fell to US$1.2362 from US$1.2391 in the previous session.
The US dollar bought 147.9800 Japanese yen, higher than 147.8450 Japanese yen of the previous session. The US dollar decreased to 0.8969 Swiss francs from 0.8982 Swiss francs, and it decreased to 1.3437 Canadian dollars from 1.3442 Canadian dollars. The US dollar decreased to 11.0915 Swedish krona from 11.1520 Swedish krona.
Short-term rates 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 RM39.49 billion in the conventional system and RM19.99 billion in Islamic funds.
Today, the central bank will conduct two conventional money market tenders, comprising a RM1 billion tender for eight days and a RM500 million tender for 14 days as well as RM500 million Qard tender for 14 days.
It will also call for reverse repo tenders, namely a RM1.5 billion tender for 32 days and will be issuing a RM3 billion Bank Negara Interbank Bills Islamic (BNIBI) tender for 30 days on Sept 21.
BNM 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, it will conduct up to RM38.5 billion conventional overnight tender and RM19.5 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6890/6935
100 yen 3.1595/1627
1 pound 5.7731/7786
1 euro 4.9853/9901
1 SGD 3.4281/4317
100 baht 12.9120/9298
1 mln rupiah 304.8/305.2
100 pesos 8.24/8.26
Gold down
The physical price of gold as at 9.30 am stood at RM281.00 per gramme, down 11 sen from RM281.11 at 5 pm yesterday. – BERNAMA
