Ringgit gains as US debt weighs on greenback

KUALA LUMPUR: The Malaysian ringgit opened stronger against the US dollar on Thursday as worries about escalating US government debt impacted the greenback, reducing hopes of a US interest rate increase, according to economist Afzanizam Rashid. The US government's debt, now surpassing $40 trillion, has recently become a focal point, with the Treasury Department intervening in the bond market to try to lower long-term yields, Rashid told the news agency Bernama.

Should the Federal Reserve decide to raise interest rates soon, it could exacerbate the US government's capacity to meet its debt commitments. Consequently, the US Dollar Index slipped 0.86% to 98.798 points as the probability of a rate hike in September dwindled. Rashid anticipates the ringgit to perform well against the US dollar within the range of RM4.04 to RM4.06 today.

At the opening, the local currency slipped versus a group of major currencies. At 8am, it strengthened to 4.0455/4.0540 against the greenback, up from Wednesday's close of 4.0565/4.0610. It depreciated against the Japanese yen to 2.5562/2.5616 from 2.5498/2.5528, and declined against the British pound to 5.5023/5.5138, from 5.4994/5.5055 on Wednesday.

Additionally, the ringgit weakened against the euro to 4.7231/4.7330 from 4.7080/4.7132, and traded mixed against regional currencies, such as the Singapore dollar (3.1819/3.1891) and Thai baht (12.3046/12.3372). Conversely, the ringgit was stronger against the Indonesian rupiah (226.7/227.3) and the Philippine peso (6.54/6.56).