Ringgit opens higher against US dollar as oil prices ease

KUALA LUMPUR: The Malaysian ringgit began the day stronger against the US dollar and major currencies on Friday, buoyed by a boost in market sentiment as worries about Middle East crude oil supply eased. By 8am, the local currency climbed to 4.0955/1015 against the US dollar, up from Thursday's close of 4.0965/1010. Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, attributed the sentiment improvement to reports that Saudi Arabia had reopened its damaged East-West pipeline and that tanker traffic through the Strait of Hormuz remained active, reducing immediate supply concerns.

As a result, Brent crude oil prices dropped 0.95% to US$104.82 per barrel, while US Treasury yields declined, with the 2-year and 10-year notes falling seven basis points each to 4.67% and 4.94%, respectively. However, focus has now shifted to the Bank of Japan's (BoJ) monetary policy decision later in the day, with expectations of a 25-basis-point rate hike to 1.25%.

The BoJ's assessment and policy tone will be closely scrutinized, as a more aggressive stance could lead to further yen carry trade unwinding and increased forex market volatility. Consequently, the economist predicts the ringgit will remain within a narrow range throughout the day as traders await this key event. The ringgit opened higher against a basket of major currencies, including the euro, Japanese yen, and British pound.

Against its ASEAN counterparts, the ringgit showed mixed performance, strengthening against the Singapore dollar, weakening against the Thai baht, and holding steady against the Philippine peso and Indonesian rupiah.