KUALA LUMPUR, Malaysia (June 23): Despite a rising greenback, the ringgit began higher against the US dollar today, boosted by stable crude oil prices and upbeat sentiment following the reaffirmation of Malaysia’s credit grade. After a significant corrective drop on Monday, the US dollar extended its recovery from yesterday.
The local note was trading at 4.1510/1555 against the greenback at 9 a.m., up from 4.1590/1620 at yesterday’s close.
S&P Global Ratings’ (S&P) confirmation of Malaysia’s sovereign credit ratings, according to Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid, indicated that the government’s finances are still in good shape, backed by the ringgit.
Malaysia’s long-term issuer ratings in foreign currency and local currency were affirmed by S&P at A- and A, respectively, with a negative outlook.
Brent crude oil prices, which were hovering between US$74 and US$75 per barrel, remained supportive of the local currency, according to Mohd Afzanizam.
“On the other hand, Jerome Powell, the chairman of the US Federal Reserve (Fed), has reassured market players that the US central bank is not in a hurry to raise rates,” he said.
Powell’s comments, he said, had bolstered the stock market, with the tech-heavy Nasdaq setting a new high as investors went into risk-on mode.
“Against this backdrop, there may be spillover to the US dollar versus ringgit pair (USD-MYR), which declined yesterday, limiting the amount of the ringgit’s depreciation against the greenback to roughly RM4.14 to RM4.15,” he told Bernama.
Powell is alleged to have stated that the US economy is continuing to show “sustained progress,” but that inflation is still a concern.
Meanwhile, Dyogenes Rodrigues Diniz, an ActivTrades trader, believes that mounting concerns about inflation in the United States have become a reality.
Despite the fact that the Fed did not make a clear move, Powell’s statement made it plain that the US dollar’s interest rate is likely to rise before September 2023, he stated.
“The market had factored that information in and pushed the US dollar higher versus the ringgit, breaking over the key resistance level of 4.1500.”
“There is no close resistance right now,” he said, “so it could fluctuate till it reaches 4.1700 in the next few days.”
Except for the Japanese yen, the ringgit was mainly weaker against a basket of major currencies at the start.
It fell against the Singapore dollar, falling to 3.0883/0919 from 3.0874/0901 yesterday, and against the British pound, falling to 5.7865/7928 from 5.7681/7723. It also fell against the euro, falling to 4.9530/9583 from 4.9426/9461 yesterday.
In contrast, the local currency rose to 3.7484/7528 versus the Japanese yen, up from 3.7658/7689 before. Continue reading
