Kuala lumpur: The ringgit opened lower against the US dollar on Wednesday, influenced by mixed market sentiment stemming from geopolitical risks and ongoing tensions between former President Trump's administration and the United States Federal Reserve (US Fed). The local currency depreciated to 4.0600/0680 against the greenback, compared to Tuesday's close of 4.0555/0600.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid noted that the US dollar index (DXY) increased by 0.29 percent to 99.152 points amid heightened geopolitical risks, with ongoing protests in Iran drawing significant attention from Trump's administration. This situation suggests that potential interference from the US is becoming more likely.
Dr. Mohd Afzanizam also highlighted the macroeconomic data in the US, pointing out that the headline inflation rate in December remained at 2.7 percent, while the core inflation rate moderated to 2.6 percent. Despite the moderation, the inflation rate is still above the 2.0 percent target, leading to expectations that the US Fed will maintain the benchmark rate steady at the upcoming Federal Open Market Committee (FOMC) meeting later this month. This stance might further escalate tensions between the Fed and the Trump administration.
In contrast to its performance against the US dollar, the ringgit traded higher against a basket of major currencies. It appreciated against the Japanese yen, euro, and British pound. Specifically, it improved to 2.5499/5551 against the yen, to 4.7267/7360 against the euro, and to 5.4506/4613 against the pound.
However, the ringgit's performance was mixed against its ASEAN peers. It gained against the Singapore dollar and the Thai baht but depreciated against the Indonesian rupiah and the Philippine peso. The local currency rose to 3.1495/1562 against the Singapore dollar and to 12.8697/9008 against the Thai baht, while it fell to 240.5/241.1 against the Indonesian rupiah and to 6.84/6.86 against the Philippine peso.