SPI Asset Management managing partner Stephen Innes said the ringgit is under pressure mainly because of concerns that the US Federal Reserve (Fed) might keep interest rates higher for longer, as markets reassess the inflation outlook.
He added that the US dollar has strengthened recently as investors are becoming less certain that the Fed will cut rates in September.
Innes also said the dollar’s recent bid reflected a subtle but growing shift in sentiment.
“Sticky core inflation, fuelled in part by service-sector dynamics and the slow-burn impact of tariffs, is keeping the Fed in a wait-and-see mode.
“The ringgit remains vulnerable to a temporary widening in the US-Malaysia exchange rate spread.
“This does not necessarily break the broader RM4.20-RM4.30 range, and we are still inside expected bands for now, but it does create a bias for further weakness,” he added.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said the ringgit weakened against the US dollar in the early morning session to RM4.2575 in response to the US consumer price index (CPI), which continued to increase in June to 2.7% from 2.4% previously.
“The latest CPI print appears to give the impression that the Fed may not be inclined to cut the Fed Fund Rate in the upcoming meeting in July.
“In a nutshell, the ringgit maintained its narrow-range trade in light of the ongoing uncertainties over the US tariffs,” Afzanizam said.
At 6pm, the local note traded at 4.2400/4.2490 from 4.2395/4.2440 at yesterday’s close.
At the close, the ringgit traded higher against a basket of major currencies.
It strengthened against the British pound to 5.6786/5.6907 from yesterday’s close of 5.7047/5.7107, improved against the Japanese yen to 2.8508/2.8569 compared with 2.8702/2.8734, and was up versus the euro at 4.9248/4.9352 from 4.9539/4.9591.
The local note also traded higher against Asean currencies.
It traded higher vis-a-vis the Singapore dollar at 3.2999/3.3071 from 3.3095/3.3133 yesterday, inched up against the Indonesian rupiah to 260.3/260.9 from 260.6/261 and strengthened versus the Philippine peso to 7.43/7.45 from 7.47/7.49.
It also gained against the Thai baht to 13.0301/13.0630 from 13.0784/13.0988.