KUALA LUMPUR: The ringgit rose against the US dollar in early trade after the release of the Federal Open Market Committee (FOMC) meeting minutes, an analyst said.
At 8 am, the ringgit strengthened to 4.4400/4500 from 4.4410/4450 at Wednesday’s close.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the minutes showed the US Federal Reserve remained unconvinced that inflation was sustainably moving towards its two per cent target, despite the labour market remaining near full employment.
“This says that they need more evidence before they can cut rates, and the prevailing Federal Funds Rate ought to stay to keep the risk of higher inflation at bay,” he told Bernama today.
Mohd Afzanizam said the meeting minutes also supported the US dollar index (DXY), which rose from 106.880 in early US trading to 107.171 overnight.
He noted that futures markets now indicate just one rate cut this year, down from the previously expected two.
“This implies that the markets have begun accepting the fact that the Fed is keen to maintain its restrictive monetary policy stance.
“As such, the ringgit could stay soft and possibly continue to flirt around its immediate resistance level of RM4.45,” he added.
Meanwhile, the ringgit traded mostly higher against major currencies.
It strengthened against the euro to 4.6274/6378 from 4.6306/6348 and advanced against the British pound to 5.5873/5999 from 5.5965/6016. However, it weakened against the Japanese yen to 2.9361/9431 from 2.9277/9305.
The ringgit also gained against most ASEAN currencies.
It rose against the Singapore dollar to 3.3063/3142 from 3.3068/3102, the Thai baht to 13.1540/1938 from 13.1769/1946, and the Indonesian rupiah to 271.9/272.7 from 272.0/272.4.
However, it was little changed against the Philippine peso at 7.64/7.66 compared to 7.64/7.65 on Tuesday.
