Kuala Lumpur: The ringgit closed slightly lower against the US dollar on Wednesday, as markets anticipated the outcome of Bank Negara Malaysia’s (BNM) overnight policy rate (OPR) decision scheduled for tomorrow, according to an analyst. At the end of the trading day, the local currency declined to 4.2360/2435 against the greenback, compared to Tuesday’s close of 4.2285/2360.
According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd’s chief economist, Dr. Mohd Afzanizam Abdul Rashid, indicated that the Monetary Policy Committee (MPC) is set to discuss the OPR decision, with economists holding differing views on the potential outcome. Some predict a 25 basis points cut, while others expect the benchmark interest rate to remain unchanged at 3.00 percent.
Mohd Afzanizam highlighted that geopolitical risks have resurfaced as a concern for traders, particularly following the recent military encounter between India and Pakistan, which has raised uncertainties about its economic implications globally. Furthermore, the ringgit has depreciated against the US dollar for two consecutive days, following a peak of RM4.20 on Monday, aligning with the broader performance of other currencies as the US Dollar Index (DXY) rose by 0.24 percent to 99.478 points.
Stephen Innes, managing partner at SPI Asset Management, mentioned that the ringgit showed a slightly weaker trend ahead of the Federal Open Market Committee meeting outcome. The US Federal Reserve is expected to maintain interest rates, though its communication might indicate a neutral or slightly hawkish position. In contrast, BNM may take a softer approach, considering the current weakening of domestic economic conditions, which continues to exert pressure on the ringgit.
By the close of trading, the ringgit weakened against a selection of major currencies. It fell against the Japanese yen to 2.9556/9613 from 2.9502/9556, depreciated against the euro to 4.8104/8189 from 4.7824/7909, and eased against the British pound to 5.6479/6579 from 5.6302/6402. The ringgit also performed weaker against its ASEAN counterparts, rising slightly against the Indonesian rupiah to 256.1/256.7 from 257.0/257, but declining against the Singapore dollar to 3.2802/2862 from 3.2749/2812, and edging lower against the Philippine peso to 7.64/7.66 from 7.60/7.62. However, it remained stable against the Thai baht at 12.9383/9691, compared to Tuesday’s rate of 12.9399/9700.