Kuala lumpur: The ringgit opened nearly unchanged against the US dollar this morning as investors awaited key lending rate decisions both in Malaysia and the United States. Bank Negara Malaysia’s Monetary Policy Committee (MPC) is set to announce its decision on the Overnight Policy Rate (OPR) tomorrow. Meanwhile, market participants are also focused on the Federal Reserve (Fed)’s upcoming decision regarding the Federal Funds Rate (FFR) next month.
According to BERNAMA News Agency, the narrowing gap between the two benchmark rates continues to be a significant factor affecting the performance of the local currency. At 8 am, the ringgit was positioned at 4.1945/2050 against the US dollar, marginally different from Tuesday’s close of 4.1950/1985.
Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, stated that the market anticipates the MPC to maintain the OPR, while expectations in the US lean towards continued rate cuts. This scenario is expected to further narrow the gap between lending rates. “This, along with ongoing fiscal reforms in Malaysia, is credit-positive for the country, likely attracting more foreign funds to Malaysian Government Securities and Government Investment Issues,” he explained.
The economist also noted that the bid-to-cover ratio for government bonds has remained robust at 2.6 times for the first 10 months of this year, compared with the 2022-2024 average of 2.2 times. Meanwhile, the US Dollar Index (DXY) is approaching the 100-point mark amid the prolonged Washington shutdown, now in its 35th day.
Mohd Afzanizam mentioned that while the Federal Reserve is expected to continue cutting interest rates, mixed opinions among its members have complicated this outlook, providing temporary support to the US dollar. He further predicted that the US dollar-ringgit pair (USD/MYR) would likely trade within a narrow range of RM4.19 to RM4.20 today.
At the opening, the ringgit was mostly higher against major currencies. It appreciated against the British pound to 5.4612/4749 from Tuesday’s close of 5.4795/4841 and strengthened against the euro to 4.8174/8294 from 4.8238/8279. However, it saw a slight decrease against the Japanese yen, moving to 2.7322/7392 from 2.7331/7355 previously.
Against ASEAN currencies, the ringgit also traded mostly higher. It advanced against the Singapore dollar to 3.2075/2158 from 3.2131/2160 at Tuesday’s close and firmed against the Thai baht to 12.8701/9118 from 12.8859/9026. It remained stable against the Indonesian rupiah at 251.0/251.8 compared to 251.0/251.4 yesterday and was steady against the Philippine peso at 7.16/7.19 from 7.16/7.18 previously.