KUALA LUMPUR: The ringgit extended its downward trend against the US dollar this morning as the greenback strengthened amidst higher-than-expected United States (US) Retail Sales data on Tuesday, analysts said.
At 9.02 am, the local note eased to 4.6425/6450 against the US dollar from 4.6335/6385 at the close yesterday.
According to the US Commerce Department, US Retail Sales increased 0.7 per cent month-on-month in July, surpassing consensus estimates of between 0.4 and 0.3 per cent.
ActivTrades trader Dyogenes Rodrigues Diniz said the higher-than-expected reading boosted expectations of a heated US economy, which could put pressure on the US Federal Reserve (Fed) to adopt more restrictive monetary policies over the coming months.
“From a technical point of view, the Relative Strength Index (RSI) indicator shows a reading of 63.34 on the daily chart, signalling that the US dollar-ringgit could continue towards the 4.6900 region in a few weeks,” he told Bernama.
Taking a similar stance, Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid added that the divergence in China’s monetary policy would also make the US dollar more appealing from the interest rate differential point of view.
“We expect the USD/MYR to linger around RM4.63-RM4.64 in the near term,” he said.
Meanwhile, the ringgit was traded mostly higher against a basket of major currencies.
It declined against the Japanese yen to 3.1885/1905 from 3.1830/1867 on Tuesday, but inched up vis-a-vis the British pound to 5.8937/8968 from 5.8966/9030 yesterday and appreciated versus the euro to 5.0617/0644 from 5.0690/0745 previously.
At the same time, the local unit was traded lower against other Asean currencies.
The ringgit fell against the Thai baht at 13.0918/1030 from 13.0908/1105 on Tuesday and slid against the Philippines’ peso to 8.17/8.19 from 8.15/8.16 yesterday.
It had also eased vis-a-vis the Singapore dollar at 3.4156/4180 from 3.4155/4197 at Tuesday’s close and declined versus the Indonesian rupiah to 302.5/302.9 from 301.9/302.4 previously.
US dollar edges up
The US dollar edged up on Tuesday, as US retail spending picked up in July better than expected, reported Xinhua.
Retail sales grew 0.7 per cent in July, the US Commerce Department reported Tuesday. That was above both the 0.4 per cent increase projected by Refinitiv economists and the 0.2 per cent gain recorded in June.
The dollar index, which measures the greenback against six major peers, rose 0.02 per cent to 103.2057 in late trading.
“The fact that the labour market is still strong is a support for spending,” said Richard Moody, chief economist at Regions Financial.
Nonetheless, Moody expected consumer spending to slow after the summer months in categories such as travel, entertainment and recreation. “There’s only so long strength in that is going to persist,” he said.
The US dollar briefly surged earlier in trading after the data before it declined, and it later rebounded.
Alex Kuptsikevich, FxPro’s senior market analyst, said that Wednesday’s release of the minutes of the latest Federal Reserve policy meeting could provide an important clue as to the direction of travel, and it is more likely that the greenback’s path will be determined at the end of next week during the Fed’s Jackson Hole symposium.
In late New York trading, the euro was unchanged at 1.0904 US dollars, and the British pound rose to 1.2705 US dollars from 1.2675 dollars in the previous session.
The US dollar bought 145.6500 Japanese yen, higher than 145.5120 Japanese yen of the previous session. The US dollar fell to 0.8788 Swiss francs from 0.8790 Swiss francs, and it rose to 1.3492 Canadian dollars from 1.3469 Canadian dollars. The US dollar rose to 10.8578 Swedish Krona from 10.8109 Swedish Krona.
Short-terms rates remain stable
Short-term rates are expected to remain stable today on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the financial system.
Liquidity is estimated at RM37.17 billion in the conventional system and RM16.49 billion in Islamic funds.
Today, the central bank will conduct a RM1 billion conventional money market tender for seven days and two reverse repo tenders, comprising a RM1.5 billion tender for 33 days and a RM500 million tender for 92 days.
BNM also announced the opening for a RM2 billion Bank Negara Interbank Bills (BNIB) tender for 31 days, to be issued on Aug 18, 2023.
The central bank also announced the availability of reverse repo, sale and buy-back agreements, as well as Collateralised Commodity Murabahah facilities for tenors of one to three months.
At 4 pm, it will conduct up to RM38.2 billion conventional overnight tender and RM16.5 billion for Murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6425/6450
100 yen 3.1885/1905
1 pound 5.8937/8968
1 euro 5.0617/0644
1 SGD 3.4156/4180
100 baht 13.0918/1030
1 mln rupiah 302.5/302.9
100 pesos 8.17/8.19
Gold up
The physical price of gold as at 9.30 am stood at RM274.69 per gramme, up 23 sen from RM274.46 at 5 pm yesterday. – BERNAMA
