Kuala Lumpur: The ringgit opened lower against the US dollar on Thursday, as expectations dimmed for a near-term rate cut by the US Federal Reserve (Fed), an analyst said. At 8 am, the local note declined to 4.2300/2650 against the greenback from Wednesday’s close of 4.2215/2275.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid noted that the US Dollar Index (DXY) rose 0.36 percent to 99.875. This increase followed the release of minutes from the Federal Open Market Committee (FOMC), which indicated that rising stagflation risks might delay monetary easing this year.
Mohd Afzanizam pointed out that the Fed appears concerned about the risks posed by persistently high inflation, even in the face of weak job growth prospects. The Fed may be hesitant to reduce the federal funds rate to support economic growth, as it also needs to ensure that inflation remains under control.
Citing the recent FOMC minutes, Mohd Afzanizam added that the risk of a US recession has increased, with uncertainties over trade policies and export restrictions potentially impeding economic activity. At the upcoming FOMC meeting in June, the Fed staff is expected to release revised macroeconomic forecasts, likely showing a downward adjustment from the March projections.
Despite the ringgit’s decline against the US dollar, it traded higher against a basket of major currencies at the opening. The ringgit rose against the Japanese yen to 2.8998/9240 from Wednesday’s close of 2.9271/9315, gained against the euro to 4.7494/7887 from 4.7838/7906, and appreciated against the British pound to 5.6779/7249 from 5.7028/7109.
The local note showed mixed performance against its ASEAN peers. It strengthened against the Singapore dollar to 3.2674/2950 from 3.2776/2825 on Wednesday and advanced against the Thai baht to 12.8771/9947 from 12.9355/9614. However, it edged lower versus the Indonesian rupiah to 259.5/261.8 from 259.0/259.5 and declined against the Philippine peso to 7.62/7.69 from 7.60/7.62.