Ringgit opens higher against US dollar on expectations of OPR normalisation

KUALA LUMPUR: On Thursday, the Malaysian ringgit opened higher against the US dollar, fueled by the potential for overnight policy rate (OPR) normalization at Bank Negara Malaysia's Monetary Policy Committee meeting next week. By 8am, the ringgit had climbed to 4.0720/0800 against the US dollar, up from Wednesday's closing rate of 4.0745/0790.

Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, noted that maintaining the same OPR at 2.75 percent may provide support for the local currency. He also pointed out that the US dollar index (DXY) is currently down by 0.19 percent to 102.127 points, as Federal Open Market Committee members left the benchmark interest rate unchanged between 3.75 percent and 4 percent.

The Federal Reserve seems to be taking a cautious approach to achieving its price stability goal amidst a robust economy. Consequently, these factors may provide strong support for the ringgit, Dr Rashid told Bernama. Despite initially trading lower against major currencies at the market open, the ringgit showed mixed performance against its Asean peers throughout the day.