The US Federal Reserve (Fed) has hinted that the chances of a pause in interest rate hike is slim as the threat of inflation still looms.
The Federal Open Market Committee (FOMC) of the Fed meets again next month when it will decide whether or not to raise the interest rate further. At its last meeting early this month, the FOMC raised the interest rate by 25 basis points (bps), pushing the benchmark rate to between 5% and 5.25%.
Bank Muamalat Malaysia Bhd chief economist and social finance head Afzanizam Rashid told Bernama that despite the risk-on mode, the US Dollar Index (DXY) gained 0.64% to 103.544 points. This, he said, had kept the Fed hawkish.
As such, he said, the ringgit is likely to stay soft, noting that the current level of RM4.5380 is quite close to its resistance level of RM4.5491.
ActivTrades trader Dyogenes Rodrigues Diniz said support for the US dollar rose alongside two new developments in the past two weeks.
Firstly, he said, the US Initial Jobless Claims data — which measures the number of people who applied for unemployment insurance — came in below expectations at 242,000 against the forecast of 254,000.
“Another macroeconomic indicator that supported the US dollar was the US Philadelphia Fed Manufacturing Index, where today’s reading came in less negative than expected at -10.4 versus the forecast of -19.8, which was also positive for the greenback,” he said.
The ringgit opened at 4.5445/4.5480 versus the greenback today, down from yesterday’s closing rate of 4.5365/4.5395.
However, it was traded higher against a basket of major currencies.
It had strengthened vis-a-vis the British pound to 5.6411/5.6454 versus 5.6452/5.6490 at the close yesterday, rose against the euro to 4.8958/4.8996 from 4.9076/4.9108 yesterday and increased against the Japanese yen to 3.2831/3.2861 from 3.2926/3.2950 previously.
However, the local note was traded mostly lower against Asean currencies.
It depreciated versus the Indonesian rupiah to 305.6/306.0 from 305.0/305.4 at yesterday’s close, declined to 3.3728/3.3756 against the Singapore dollar from 3.3724/3.3748 yesterday and slid against the Philippine peso at 8.14/8.15 from 8.11/8.13 previously.
However, the ringgit appreciated vis-a-vis the Thai baht to 13.1839/13.2002 from 13.2105/13.2247 yesterday.