HomeNewsBeritaBusinessLifestyleOpinionWorldSportsPropertyEducationCarzillaGalleryVideosAccelerator

Ringgit should strengthen if Fed pauses rate hike, says analyst

-

Federal Reserve may temporarily halt monetary tightening following moderating US inflation.

0
Shares
Total Views: 1
Free Malaysia Today

KUALA LUMPUR:
The ringgit opened marginally lower against the US dollar today due to a lack of demand despite the lower US Dollar Index (DXY), said an analyst.

“Technical indicators suggest that the ringgit is in an oversold condition against the US dollar, so we could see the ringgit appreciating today,” said Bank Muamalat chief economist Afzanizam Abdul Rashid.

Noting that the DXY declined by 0.3% to 103.33 points, he said the ringgit might get a boost if the Federal Reserve (Fed) pauses interest rate hikes following the drop in US inflation rate yesterday.

The US headline Consumer Price Index (CPI) for May came in lower than expected, indicating a steady decline in prices of goods in the country.

The US headline CPI eased to 4% year-on-year (y-o-y) in May 2023, lower than the consensus estimates of 4.1%.

Similarly, the core CPI moderated further to 5.3% during the month from 5.5% in May 2022.

“This suggests that the 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 actions and allow the inflation rate to edge lower without having to resort to further monetary tightening,” he told Bernama.

At 9am, the local note eased to 4.6190/6240 versus the greenback from yesterday’s close of 4.6115/6185.

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 Philippine 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.

Stay current - Follow FMT on WhatsApp, Google news and Telegram

Subscribe to our newsletter and get news delivered to your mailbox.