Ringgit weakens against greenback in early session

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The ringgit opened lower against the US dollar on Friday on better demand for the greenback due to a more hawkish stand by the United States Federal Reserve (Fed).

KUALA LUMPUR - The ringgit opened lower against the US dollar on Friday on better demand for the greenback due to a more hawkish stand by the United States Federal Reserve (Fed), said an analyst. At 9.01 am, the local note fell to 4.4735/4790 against the US dollar from Thursday’s close of 4.4730/4780.

Bank Muamalat Malaysia Bhd head of economics, market analysis and social finance Dr Mohd Afzanizam Abdul Rashid said the 10-year US Treasury yield has surpassed the four per cent level, hovering at 4.06 per cent currently.

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"While the European economies continue to record higher inflation rate for the latest print at 8.5 per cent, it still resulted in a strong US dollar.

"As such, the ringgit should trade on the weaker side,” he told Bernama.

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Meanwhile, SPI Asset Management managing director Stephen Innes said it has been a tough week for the Asian foreign exchange due to a more hawkish Fed narrative, with the market increasingly pricing in a higher terminal Fed funds rate.

He said as a consequence, higher US Treasury yields have taken a toll on the ringgit.

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"The ringgit is now caught between misaligned macro drivers -- a stronger China outlook and a persistent hawkish Fed.

"However, the restart of China data releases this week, where the PMI came in strong, alongside the likely pro-growth tone to the two-session policy event, should offer a better macro setup for Asian foreign exchange and the ringgit.

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"For today, I expect the ringgit to trade in a tight range but may trade a tad stronger due to the China impulse, but the hawkish Fed will likely provide a drag until US economic data turns lower,” he said.

Innes said the 10-year US Treasury yield was up by eight basis points to 4.07 per cent, the highest since Nov 9, 2022.

The ringgit traded higher against a basket of major currencies. The local unit appreciated against the euro to 4.7468/7527 from 4.7539/7592 yesterday, improved against the Japanese yen to 3.2737/2780 from 3.2772/2813 and rose against the British pound to 5.3543/3609 from 5.3546/3606 previously.

The ringgit however traded lower against Asean currencies.

It decreased versus the Singapore dollar to 3.3238/3281 from 3.3210/3252 on Thursday and depreciated vis-a-vis the Thai baht to 12.8697/8929 from 12.8583/8789.

The ringgit was flat against the Philippine peso at 8.13/8.17 from 8.13/8.14 and fell against the Indonesian rupiah at 292.70/293.20 from 292.60/293.20 yesterday. - BERNAMA