KUALA LUMPUR, July 25 (NNN-Bernama) — The ringgit opened lower against the US dollar Tuesday ahead of Wednesday’s Federal Open Market Committee (FOMC) interest rate announcement.
As the US Federal Reserve is widely expected to raise interest rates by another 25 basis points, investors are looking forward to the accompanying statement to gauge the future outlook for rates.
At 9 am, the local note fell to 4.5705/5740 against the greenback compared with 4.5640/5690 at Monday’s close.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the possible rate hike would given an edge to the US dollar as the differential between the Federal Funds Rate and overnight policy rate (OPR) is set to widen further, making US assets more attractive.
“Nonetheless, the final purchasing managers’ index (PMI) readings for various jurisdictions were lower in particular for the US manufacturing sector, indicating that manufacturers have become increasingly wary about their business prospects.
“This may have an impact on their decision on labour hiring and capital expenditure. So, the case for central banks to be not overly restrictive is building up,” he told Bernama.
On the home front, Mohd Afzanizam said the Central bank of Malaysia may keep the OPR steady at 3.00 per cent throughout the year as the real rate of interest has turned positive for the second month in a row to 0.6 per cent.
“The latest consumer price index (CPI) print for Malaysia came in lower at 2.4 per cent in June, suggesting that monetary policy is not excessively accommodative,” he said.
He expected the ringgit to range between 4.56 and 4.57 level versus the greenbcak today.
Meanwhile, the local unit traded mostly lower against a basket of major currencies.
It slipped vis-a-vis the euro to 5.0586/0625 from 5.0578/0634 at Monday’s close, and was almost flat against the British pound at 5.8576/8620 from 5.8556/8620 and was little changed versus the Japanese yen at 3.2305/2334 from 3.2307/2345 previously.
The local note traded mostly lower against other Asean currencies.
The ringgit slid vis-a-vis the Philippine peso to 8.38/8.39 from 8.35/8.37 yesterday, was easier against the Indonesian rupiah at 304.1/304.5 from 303.6/304.2, depreciated versus the Singapore dollar to 3.4316/4347 from 3.4287/4328, but improved against the Thai baht to 13.2363/2522 from 13.2417/2623 on Monday.
— NNN-BERNAMA
