Kuala Lumpur: The ringgit ended slightly higher against the US dollar on Tuesday, as investors remained cautious ahead of the Federal Open Market Committee (FOMC) meeting scheduled for March 19, according to an analyst.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid emphasized the significance of the upcoming FOMC meeting. Market participants are expected to closely monitor the latest macroeconomic projections, particularly the Federal Funds Rate (FFR).
At 6 pm, the ringgit inched up to 4.4100/4175 against the greenback from Monday’s close of 4.4200/4235. Mohd Afzanizam highlighted that the interest rate futures contract indicates a higher likelihood of rate cuts in May, June, July, and September, with the FFR expected to finish the year at approximately 3.50 to 3.75 per cent.
“This suggests a 75 to 100 basis point cut in the FFR, which essentially will narrow the gap with the overnight policy rate (OPR). This could be a boon for the ringgit should the OPR stay unchanged throughout the year,” he told Bernama.
He also noted that equities markets saw widespread declines, with traders and investors concerned about a weak global economy that could significantly impact corporate earnings this year. Furthermore, he added that the US Dollar Index (DXY) is still hovering around 103 points and has fallen by 0.14 per cent.
“This is given the fact that major currencies in the DXY constituent such as the euro, British pound, Japanese yen, Canadian dollar, Swedish krona and Swiss franc have gained against the US dollar,” Mohd Afzanizam said.
The ringgit was traded mostly higher against a basket of major currencies. It rose versus the Japanese yen to 2.9921/9974 from 3.0013/0039 at Monday’s close and advanced against the British pound to 5.7035/7132 from 5.7080/7125. The ringgit dipped vis-a-vis the euro to 4.8091/8173 from 4.7992/8030 previously.
The local currency traded mostly higher against ASEAN currencies. It gained versus the Singapore dollar at 3.3118/3177 from Monday’s closing of 3.3211/3242, appreciated against the Thai baht to 13.0415/0695 from 13.0777/0943 and edged higher vis-a-vis the Indonesian rupiah to 268.7/269.3 from 270.0/270.3 previously.