Kuala lumpur: The ringgit closed slightly lower against the US dollar on Thursday as escalating tensions in West Asia fuelled expectations of a potential United States (US) interest rate hike, supporting the greenback. At 6 pm, the local currency eased to 4.0870/0910 versus the greenback from yesterday's close of 4.0850/0890.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid highlighted that crude oil prices continue to rise, with West Texas Intermediate (WTI) and Brent crude prices increasing by 3.19 percent and 4.23 percent to US$89.60 per barrel and US$98.05 per barrel, respectively. The renewed military attacks in West Asia have sparked global oil supply concerns, exacerbated by the fragile state of US-Iran peace negotiations.
Dr Mohd Afzanizam further noted the surge in oil prices has prompted questions on how global central banks might respond to these price shocks, with some potentially considering tighter monetary policy to manage inflationary pressures. The increased likelihood of a US interest rate hike in the September meeting has also strengthened the US dollar, with the US Dollar Index (DXY) rising by 0.04 percent to 101.169 points.
Consequently, the ringgit fluctuated within a narrow range today, moving between RM4.0833 and RM4.0908 against the greenback. Mohd Afzanizam also pointed out that the European Central Bank (ECB) is set to announce its policy rate decision later today. While the consensus expects the benchmark interest rate to remain unchanged, the market will be keenly observing the ECB's policy stance in light of the current developments in West Asia.
Meanwhile, the ringgit traded mostly lower against a basket of major currencies at the close today. It gained against the Japanese yen to 2.5015/5041 from 2.5057/5081 at Wednesday's close but depreciated against the euro to 4.6641/6686 from 4.6585/6631 yesterday, and declined versus the British pound to 5.4647/4701 from 5.4612/4666 previously.
The local currency also showed a mixed performance against regional currencies. It appreciated against the Indonesian rupiah to 227.8/228.1 from 228.0/228.3 at Wednesday's close, but slid against the Singapore dollar to 3.1667/1701 from 3.1635/1668 yesterday, fell against the Thai baht to 12.0860/1021 from 12.0787/0944, and weakened against the Philippine peso to 6.62/6.63 from 6.61/6.62 at the previous close.