Ringgit opens higher vs US dollar ahead of key central bank meetings

KUALA LUMPUR: The Malaysian ringgit opened higher against the US dollar on Tuesday, as investors approached key central bank meetings later in the week with cautious optimism, according to economist Dr Mohd Afzanizam Abdul Rashid. The local currency climbed to 4.0705/0775 against the greenback, up from yesterday's close of 4.0735/0770.

The market is primarily watching the upcoming Federal Open Market Committee (FOMC) meeting and Bank of Japan (BoJ) policy decisions, which could influence the ringgit's movements. Dr Rashid, Bank Muamalat Malaysia Bhd chief economist, told Bernama that a potential 25 basis point interest rate hike by the US Federal Reserve (Fed) seems likely.

He pointed to recent bond market data, noting that yields for three- and six-month US Treasury bills rose to 3.97% and 4.06%, respectively, reflecting increased expectations of Fed action. Additionally, Dr Rashid highlighted a current Brent crude price hovering around US$105.68 per barrel, with disruptions expected as the major Saudi Arabian East-West pipeline is expected to be out of service for weeks.

This potential supply shortage could put upward pressure on global oil prices. As a result, the ringgit is anticipated to trade within a narrow range on Tuesday. At the market opening, the ringgit showed mixed performance against major currencies: it strengthened against the euro to 4.7006/7087, weakened against the yen to 2.6362/6409, and declined against the British pound to 5.4952/5046, compared to its previous levels.

The local currency also exhibited mixed trends against ASEAN currencies, appreciating against the Singapore dollar to 3.2041/2101, advancing against the Indonesian rupiah to 230.3/230.8, and rising against the Philippine peso to 6.47/6.49. However, it weakened against the Thai baht to 12.2476/2742.