Kuala Lumpur: The ringgit has opened slightly higher against the US dollar, benefitting from the weakening trend of the greenback. This is due to the market’s anticipation of a lower United States (US) Consumer Price Index (CPI) print that is set to be released tomorrow. As of 9:05 am, the local note was trading at 4.6605/6650 against the greenback, compared to Monday’s closing rate of 4.6685/6725.
Bank Muamalat Malaysia Bhd’s chief economist and social finance head, Dr Mohd Afzanizam Abdul Rashid, explained that consensus estimates predict slower increases in the US headline and core CPI for June. The estimates are 3.1% (compared to May’s 4.0%) and 5.0% (compared to May’s 5.3%), respectively. He also mentioned that the US dollar index has declined to 101.94 points, while the 10-year US Treasury note yield has eased to 3.99%, down from its previous level of over 4.00% in the past two days.
In addition to the US data, indicators from China have been inconclusive, with the inflation rate remaining flat at 0.0% in June, after experiencing a 0.2% rise in the previous month. To support the real estate sector, Chinese authorities have announced measures, including granting a one-year loan extension for struggling property developers.
“In that sense, the MYR/USD is expected to remain weak as the global outlook remains highly uncertain,” said Dr Mohd Afzanizam. However, he also pointed out that despite the potential short-term weakening of the ringgit, foreign investors have continued to be net buyers in Malaysia’s bond market. In June, foreign investors bought RM5.2 billion in bonds, compared to RM3.0 billion the previous month. Overall, in the first half of 2023, foreign funds have been net buyers at RM21.2 billion, a significant reversal from being net sellers of RM3.2 billion in the same period of 2022. Notably, foreign investors have been accumulating Malaysian Government Securities (MGS), Government Investment Issue (GII), and Malaysia Islamic Treasury Bills (MITB), amounting to RM13.4 billion, RM9.1 billion, and RM2.4 billion, respectively.
“As such, it’s not all gloom and doom for the ringgit as foreign investors continue to favor Malaysia’s bond market. Perhaps, they see a possible appreciation of the ringgit on the horizon and the prospect of lower interest rates going forward,” explained Dr Mohd Afzanizam.
Meanwhile, the ringgit has traded lower against other major currencies. It weakened against the euro, slipping to 5.1307/1357 from Monday’s close of 5.1176/1220. It also depreciated against the Japanese yen, falling to 3.2985/3020 from 3.2761/2792. Lastly, the ringgit weakened against the British pound as well, trading at 5.9981/6.0039, down from 5.9785/9836.
The ringgit also saw losses against other ASEAN currencies. It eased versus the Singapore dollar to 3.4692/4728 from its previous closing rate of 3.4612/4644. It weakened against the Thai baht to 13.3214/3400 from 13.2790/2961. Lastly, it marginally decreased against the Philippine peso, trading at 8.39/8.40 from 8.38/8.39. However, the ringgit did show some improvement against the Indonesian rupiah, trading at 306.4/306.9 from its previous rate of 306.9/307.4. – Bernama
Credit: The Star : Business Feed
