Kuala Lumpur: The ringgit closed lower against the US dollar on Thursday, attributed to a perceived return of confidence in the greenback, according to an economist. Bank Negara Malaysia (BNM) announced that it has maintained the Overnight Policy Rate (OPR) at 3.00 percent.

According to BERNAMA News Agency, at 6pm, the local note inched lower to 4.2780/2830 versus the greenback compared to Wednesday’s close of 4.2360/2435. Bank Muamalat Malaysia Bhd chief economist, Dr. Mohd Afzanizam Abdul Rashid, indicated that the Monetary Policy Committee (MPC) chose to keep the OPR unchanged, citing global economic growth and rising domestic demand, despite escalating downside risks to growth.

BNM announced a 100 basis points cut in the Statutory Reserve Requirement (SRR), which is expected to inject RM19 billion worth of liquidity into the system, thereby facilitating more lending and financing activities among banks. Dr. Mohd Afzanizam suggested that the possibility of more trade deals with the United States could bolster the US dollar, as confidence in the greenback seems to be returning. He noted that the US Dollar Index (DXY) continues to rise, reaching 100.074 points amid growing momentum for trade deals with the US. Consequently, the ringgit depreciated by 0.82 percent to RM4.27.

Stephen Innes, managing partner at SPI Asset Management, remarked that a hawkish stance from the Federal Open Market Committee (FOMC) also contributed to the ringgit’s decline. “With Wall Street futures gaining and trade-related macro uncertainty easing, the dollar’s previous headwinds are lifting. As a result, the greenback is showing renewed strength across the board,” he said.

At the close, the ringgit traded mostly lower against a basket of major currencies. It gained against the Japanese yen to 2.9534/9571 from 2.9556/9613 at Wednesday’s close but eased against the euro to 4.8264/8321 from 4.8104/8189, and fell against the British pound to 5.6769/6835 from 5.6479/6579 previously. Additionally, the ringgit weakened against its ASEAN peers, falling versus the Singapore dollar to 3.2984/3025 from 3.2802/2862, declining against the Thai baht to 13.0189/0404 from 12.9383/9691, and edging lower against the Indonesian rupiah to 259.2/259.6 from 256.1/256.7. The local note also slightly decreased against the Philippine peso to 7.69/7.70 from 7.64/7.66 previously.