Ringgit opens higher against major currencies, flat vs greenback

At 8am on Tuesday, the Malaysian ringgit opened higher against major currencies, although it remained unchanged against the US dollar, at 4.0540/4.0590. This situation persisted amidst expectations of a potential interest rate hike by the US Federal Reserve following stronger-than-expected inflation data. Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid noted that the US Consumer Price Index (CPI) increased by 0.4% month-on-month in October, exceeding the consensus estimate of 0.3%.

This increased confidence in the prospect of higher interest rates, which in turn pushed the yield on the two-year US Treasury note up by 18 basis points to 4.74%. Additionally, the US Dollar Index strengthened by 0.57% to 102.233 points. Fed governor Christopher Waller hinted at a 50 basis point hike during the upcoming Federal Open Market Committee meeting on Dec 8 and 9, while Dallas Fed president Larrie Logan suggested a rate hike of at least two-quarters.

Consequently, the ringgit faced downward pressure due to these developments in the US market. The ringgit showed resilience against a basket of major currencies, rising against the Japanese yen, euro, and British pound, while trading mixed against its Asean peers.