Ringgit opens lower against US dollar as cautious mode prevails

Ringgit opens lower against US dollar as cautious mode prevails
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KUALA LUMPUR (July 5): The ringgit opened lower against the US dollar on Tuesday (July 5) as traders remained cautious ahead of Bank Negara Malaysia’s (BNM) two-day Monetary Policy Committee (MPC) meeting to start on Tuesday, analysts said.

At 9am, the local currency had slid to 4.4135/4160 against the US dollar compared with 4.4120/4145 at the close on Monday.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said in the absence of US markets which were closed for the Independence Day holiday on Monday, sentiment on the ringgit will continue to revolve around the MPC meeting.

He said expectations of a higher overnight policy rate appeared to have helped to boost the ringgit against regional currencies.

"The ringgit’s performance versus the Singapore dollar has been commendable, currently hovering at 3.15 after reaching close to 3.20 earlier.

“If BNM maintains its course to normalise monetary policy, it should provide a fillip to the ringgit," he told Bernama.

Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said there was only a marginal difference in the US dollar/ringgit pair on Tuesday as many traders were away due to the US Independence Day holiday.

“However, we might see significant market volatility later this week with the release of ADP non-farm employment data on Wednesday and non-farm payrolls on Friday. 

"The US employment data is relevant as it provides clues about the US Federal Reserve’s (Fed) next move regarding monetary policy,” he said.

He noted that the most recent reading showed US unemployment at 3.6%, in line with pre-pandemic reality, adding that the Fed will continue to face the challenge of controlling the highest inflation pace in the last 40 years.

Meanwhile, the ringgit was traded higher against a basket of major currencies, except the Singapore dollar.

 The local currency gained against the British pound at 5.3456/3487 against Monday’s close at 5.3496/3526, strengthened versus the Japanese yen to 3.2440/2461 from 3.2578/2599 previously, and rose vis-a-vis the euro to 4.6046/6072 from 4.6070/6096.

However, it depreciated against the Singapore dollar to 3.1599/1620 from 3.1596/1618 on Monday.