KUALA LUMPUR, 16 JULY: The ringgit rose versus the dollar today as US stocks fell after Federal Reserve Chairman Jerome Powell’s dovish testimony failed to give any new impetus for investors to buy riskier assets, according to an analyst. At 9 a.m., the local currency increased 20 basis points (bps) against the US dollar to open at 4.2000/2015, up from 4.2020/2030 at Thursday’s close.
Powell stated that inflation would initially exceed the Fed’s 2 percent target before falling to match the target, implying that tightening policy was premature.
As a result, investors were uninspired by today’s mixed economic data and the third day of relatively strong earnings from US banks, according to OANDA senior market analyst Edward Moya.
“Risk aversion is firmly in place,” he told Bernama, “perhaps because the earnings bar was set too high for the banks and the reopening trade can’t get its groove back.”
Meanwhile, Adam Mohamed Rahim, an analyst at Bank Islam Malaysia Bhd, said that concerns about the rapid spread of the Covid-19 Delta type had led many Asian countries to tighten movement restrictions once further, putting downward pressure on oil prices amid sluggish demand predictions.
“Given the nature of Brent crude oil price having a causality effect towards the local note, a weaker oil price will subsequently convert into a weaker ringgit,” he said.
He predicted that the ringgit would trade in a range of RM4.19 to RM4.20 today.
The ringgit was trading higher versus a basket of major currencies at the start of the day.
The local currency strengthened to 4.9606/9624 against the euro from 4.9764/9776 at Thursday’s end, to 3.8220/8237 against the Japanese yen from 3.8256/8265, to 3.0994/1010 against the Singapore dollar from 3.1052/1062, and to 5.8090/8111 against the British pound from 5.8252/8266 previously./n
