Kuala Lumpur: The ringgit opened slightly higher against the US dollar this morning amidst cautious market sentiment with a potential gradual US tariff hike and the upcoming release of the US Producer Price Index (PPI) and Consumer Price Index (CPI) later this week. At 8 am, the ringgit traded at 4.4925/5050 against the greenback versus 4.5080/5120 at yesterday’s close.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the US Dollar Index (DXY) remained elevated at 109.956 points after reaching 110.163 points last night, marking the highest level since November 2022 when the Fed was raising policy rates to curb inflation. Meanwhile, US President-elect Donald Trump’s economic team is reportedly considering a gradual tariff increase of two per cent to five per cent per month under the International Emergency Economic Powers Act. This approach aims to boost negotiating leverage while minimizing inflation risks.
Dr Mohd Afzanizam highlighted that the ringgit is expected to remain in a tight range from RM4.50 to RM4.51. He further mentioned that this week’s data on the US PPI and CPI would be another reason for the market to stay vigilant, as consensus is predicting the headline PPI to rise to 3.4 per cent in December 2024 from 3.0 per cent previously. Additionally, the CPI is expected to increase to 2.9 per cent in December compared to the preceding month’s 2.7 per cent.
He also noted that the US Federal Reserve (Fed) is likely to keep the Fed Fund Rate unchanged in the upcoming Jan 28-29 Federal Open Market Committee meeting. Meanwhile, the ringgit opened mostly lower against major currencies. It strengthened versus the Japanese yen to 2.8555/8636 from yesterday’s close of 2.8706/8733, but it fell against the euro to 4.6107/6235 from 4.5964/6004 and weakened against the British pound to 5.4943/5096 from Monday’s close of 5.4592/4640.
The local note was traded mixed against ASEAN currencies. The ringgit advanced further versus the Philippine peso to 7.65/7.68 from 7.68/7.69 and was higher against the Indonesian rupiah at 275.8/276.8 from 276.8/277.2 recorded at yesterday’s closing. It declined against the Thai baht to 12.9486/9947 from 12.9440/9618 and was down against the Singapore dollar to 3.2830/2926 compared with 3.2788/2822 at yesterday’s close.