KUALA LUMPUR: The ringgit appreciated against the US dollar at the opening today, supported by rising oil prices and strong demand from China for Malaysia’s main commodities, particularly oil, said an analyst.
At 9 am, the local note firmed at 4.6485/6535 against the greenback compared with 4.6570/6610 at Tuesday’s close.
SPI Asset Management managing director Stephen Innes said the prospect of credit extensions to property developers should see China’s attempt to monetise projects by accelerating construction to drive sales boost commodity demand.
China’s authorities have also announced measures to support the real estate sector by allowing a one-year loan extension for ailing property developers.
“This is positive for ringgit trading today. Nevertheless, the markets expect a decline in US inflation on Wednesday, but of course, the question is how much it will beat consensus,” he told Bernama.
He explained that a softer US inflation print would weaken the greenback, hence local exporters could be selling the US dollar for ringgit especially as there are signs of the yuan stabilising.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid opined that the local note should be well supported today as anticipation of lower Consumer Price Index (CPI) in the US, which would be released tonight, gathers more steam.
“The US Treasury yield fell a further 3.96 per cent, while the US Dollar Index (DXY) dropped to 101.496 points.
“The immediate support level is located at 4.6257,” he said.
At the time of writing, the benchmark Brent crude oil price rose 0.14 per cent to US$79.51 per barrel.
Meanwhile, the ringgit traded mostly lower against a basket of major currencies.
It slipped against the Japanese yen to 3.3282/3320 from 3.3162/3193 on Tuesday’s close and weakened against the British pound to 6.0193/6.0258 from 6.0136/0187 but rose vis-a-vis the euro to 5.1226/1282 from 5.1264/1308 previously.
The local note was also traded mixed against other Asean currencies.
The ringgit strengthened versus the Singapore dollar to 3.4716/4756 from Tuesday’s close of 3.4723/4755 and it improved against the Indonesian rupiah to 306.7/307.2 from 307.2/307.7 previously.
However, the local note weakened against the Thai baht to 13.3885/4076 from 13.3780/3956 and was flat against the Philippine peso at 8.42/8.45 from 8.42/8.43 yesterday.
US dollar ticks down
The US dollar weakened on Tuesday as the benchmark 10-year US Treasury yields slipped, while all eyes are on US consumer prices data due on Wednesday, reported Xinhua.
The dollar index, which measures the greenback against six major peers, was down 0.24 per cent to 101.7344 in late trading.
The US Treasury yields have retreated from their highs seen last week, with the benchmark 10-year note dunking under 4 per cent. Traders are looking ahead to Wednesday’s US June inflation report, which is expected to show prices cooled on an annual basis in June.
“Should the report show further signs of slowing inflation, this could fuel speculation around the Fed’s hiking cycle nearing an end,” said Lukman Otunuga, market analyst at FXTM.
Growth of risk asset prices in major markets and improving investors’ sentiment also weighed on demand for the US dollar on Tuesday.
Meanwhile, the governor of the Bank of England Andrew Bailey said on Monday night, “We will do what is necessary for as long as necessary to tackle inflation persistence and bring it back to the 2 per cent target.”
In late New York trading, the euro was unchanged at close to US$1.0999 from US$1.0999 in the previous session, and the British pound was up to US$1.2928 from US$1.2856 in the previous session.
The US dollar bought 140.4630 Japanese yen, lower than 141.3010 Japanese yen of the previous session. The US dollar was down to 0.8799 Swiss francs from 0.8854 Swiss francs, and it decreased to 1.3239 Canadian dollars from 1.3279 Canadian dollars. The US dollar was down to 10.6696 Swedish Krona from 10.7647 Swedish Krona.
Short-term rates to 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 RM45.99 billion in the conventional system and RM27.21 billion in Islamic funds.
Today, the central bank will call for two reverse repo tenders, namely a RM1.5 billion tender for 30 days and a RM500 million tender for 92 days.
It 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, BNM will conduct up to RM47.5 billion conventional overnight tender and RM27.4 billion murabahah overnight tender.
Foreign exchange rates
Following are the opening Malaysian foreign exchange for major currencies today:
1 USD 4.6485/6535
100 yen 3.3282/3320
1 pound 6.0193/6.0258
1 euro 5.1226/1282
1 SGD 3.4716/4756
100 baht 13.3885/4076
1 mln rupiah 306.7/307.2
100 pesos 8.42/8.45
Gold down
The physical price of gold as at 9.30 am stood at RM279.92 per gramme, down 66 sen from RM280.58 at 5 pm yesterday. – BERNAMA
