Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said US treasury secretary Janet Yellen’s latest message continued to indicate that the debt ceiling impasse could potentially be catastrophic for the economy.

“This might result in bond yields rising as the US government’s credit risks would escalate.

“As such, this will continue to exert weaker sentiment in the foreign exchange (FX) market, leading to higher demand for the US dollar as investors are seeking refuge against extreme volatility,” he told Bernama.

Afzanizam further said that the US Dollar Index (DXY) remained at elevated levels, with the US dollar-ringgit yesterday surpassing the immediate resistance level of 4.5491.

“The next resistance level would be at 4.6257 based on technical readings.

“However, ringgit is already at an oversold position and, therefore, the US dollar-ringgit would remain in a narrow range of around 4.5500 as we believe there could be some compromise from the US debt ceiling stalemate,” he added.

At 9.04am, the local currency stood at 4.5475/5520 versus the greenback from yesterday’s closing rate of 4.5470/5515.

Meanwhile, the ringgit was traded firmer against a basket of major currencies.

It strengthened vis-a-vis the British pound to 5.6548/6604 from 5.6578/6634 on Monday, up against the euro to 4.9154/9203 from 4.9189/9238 and was higher against the Japanese yen at 3.2810/2845 from 3.2973/3008 yesterday.

The local currency was traded mixed against other Asean currencies.

It was unchanged versus the Indonesian rupiah at 305.3/305.8 from Monday’s close, rose to 3.3773/3811 from 3.3799/3835 against the Singapore dollar and gained vis-a-vis the Thai baht to 13.1835/2019 from 13.1950/2138.

However, the ringgit was marginally lower against the Philippine peso to 8.16/8.17 against 8.14/8.16 from Monday’s close.