The ringgit opens higher against major currencies but slides against the greenback as strong US inflation data fuels hawkish Fed expectations.
KUALA LUMPUR: The ringgit opened higher against major currencies today but eased marginally against the US dollar after stronger-than-expected United States inflation reinforced expectations that the Federal Reserve (Fed) could keep interest rates higher for longer.
At 8 am, the local currency slipped to 4.0685/0750 against the greenback from Wednesday’s close of 4.0670/0715.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US Consumer Price Index (CPI) was the main focus overnight, with inflation accelerating to 4.2 per cent in May, the highest level since May 2023.
“The statistical releases gave the impression that the Fed is likely to be more hawkish when the Federal Open Market Committee members hold their meeting next week.
“US Treasury yields continued to climb, with the 10-year yield rising to 4.55 per cent, suggesting that inflation risks are increasing,” he told Bernama.
However, Mohd Afzanizam said foreign exchange markets are likely to remain cautious ahead of the Fed’s response to the latest CPI data and how it would be reflected in its projections for the federal funds rate.
The local currency traded higher against a basket of major currencies.
It strengthened against the Japanese yen to 2.5343/5385 from 2.5347/5377, appreciated against the British pound to 5.4367/4454 from 5.4486/4546, and rose against the euro to 4.6934/7009 from 4.7006/7058 at Wednesday’s close.
The ringgit traded mostly higher against its regional peers.
It appreciated against the Singapore dollar to 3.1583/1636 from 3.1591/1628 and strengthened against the Thai baht to 12.3363/3635 from 12.3688/3871 previously.
However, it eased against the Indonesian rupiah to 226.7/227.1 from 226.6/227.0 and was little changed against the Philippine peso at 6.62/6.64 compared with 6.62/6.63 at yesterday’s close.
