Ringgit rebounds to open higher against US dollar

Ringgit banknotes are seen at a currency exchange office in Kuala Lumpur on June 20, 2018. – Bernama pic

Friday 01 Jul 2022 11:01 MYT

KUALA LUMPUR, July 1 – The ringgit rebounded after two consecutive trading days of losses to open slightly higher against the US dollar this morning ahead of the scheduled fourth meeting of the Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM). next week, an analyst said. .

At 9 am, the local currency appreciated to 4.4060/4070 against the greenback against 4.4075/4090 at yesterday’s close.

Stephen Innes, managing partner of SPI Asset Management, said market investors were pricing the expected hike in BNM’s key overnight rate (OPR) at more than 4%.

“With inflation managed by subsidies and price controls, and few quantitative easing measures, BNM does not need to push too hard on the rate hike front.

“Therefore, we believe the BNM will not be as aggressive as market prices, and this opens the door to a weaker ringgit, unless the Federal Reserve (Fed) is expected to pull its foot off the rate hike after September. “, did he declare.

He said the main risk to the ringgit comes from election risk, which typically holds back inflows, while the overarching risk where the ringgit has significantly underperformed is that it has not responded well to improving terms. of exchange via the rise in oil prices.

“I expect the ringgit to remain weak until the Federal Reserve Board indicates that it must cut rates and there is a definitive change in China’s zero Covid-19 policy.

“We expect the dollar-ringgit to trade at 4.45 before improving in the fourth quarter due to a pause in Fed rate hikes and improving growth in China. But we don’t see ringgit going back below RM4.20 anytime soon, so we’re aiming for RM4.35 by the end of the year,” he said.

Nonetheless, the ringgit traded lower against a basket of major currencies.

The Ringgit was slightly lower against the British Pound at 5.3559/3571 against Thursday’s close at 5.3485/3503 and weakened against the Japanese Yen at 3.2411/2423 from 3.2344/2357 previously.

The local currency also depreciated against the Singapore dollar at 3.1686/1696 from 3.1670/1685 previously and fell against the euro at 4.6144/6155 from 4.5961/5977 yesterday. . — Bernama

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