Kuala lumpur: The ringgit surged to 4.11 against the greenback at the close on Thursday, hitting a new high in almost four and a half years, as weaker economic data in the United States continued to heighten expectations of a cut in US interest rates.
According to BERNAMA News Agency, at 6 pm, the ringgit bounced to 4.1115/1165 versus the greenback compared to Wednesday’s close of 4.1200/1235. This marked its highest level in four years and five months, surpassing the previous high recorded on June 16, 2021, when the ringgit closed at 4.1155.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan attributed the ringgit’s rise to softer US economic data, particularly the sharp drop in the latest ADP employment report, which has bolstered expectations for a US interest rate cut. He noted, ‘The sharp drop in ADP payrolls – with private employment decreasing by 32,000 jobs in November after an upwardly revised 47,000 increase in October, has strengthened expectations of a cut (when the US Federal Reserve (Fed) meets next week).’
Mohd Sedek further mentioned the growing confidence that the Fed may commence policy normalization next week, which has kept the US dollar on the defensive and provided additional support to Asian forex, including the ringgit.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid indicated that market participants would be closely watching two other critical US economic indicators-initial jobless claims and the Challenger job cuts report-due for release later in the evening. He stated, ‘Tonight, the initial jobless claims figures will be released with consensus pencilling in 219,000 compared to the prior week of 216,000. There is also data from the Challenger job cuts report, which measures the number of layoffs for November. In October, the number of job cuts shot up to 153,000 versus 54,000 in the previous month,’ adding that these developments are expected to continue supporting the ringgit in the near term.
At the close, the ringgit trended lower against major currencies. It fell versus the British pound to 5.4868/4935 from 5.4697/4744 at Wednesday’s close, slid against the euro to 4.8014/8075 from 4.7982/8022, and edged down vis- -vis the Japanese yen to 2.6555/6589 from 2.6476/6501.
However, the local note traded higher against ASEAN currencies. It gained versus the Singapore dollar to 3.1747/1788 from 3.1810/1839 at Wednesday’s close and climbed against the Indonesian rupiah to 246.8/247.3 from 247.7/248.1 previously. The ringgit also rose against the Philippine peso to 6.96/6.98 from 6.99/7.00 and increased vis- -vis the Thai baht to 12.8304/8520 from 12.9024/9186 yesterday.