Ringgit Firmer Against US Dollar On Sustained Hope For Fed Rate Cut

By NurulJannah Kamaruddin

KUALA LUMPUR, Feb 17 (Bernama) -- The ringgit ended higher against the US dollar, fueled by continued expectation that the US Federal Reserve (Fed) will cut interest rates.

At 6 pm, the ringgit rose to 4.4300/4360 versus the greenback compared to Friday’s close of 4.4310/4385.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said weak US consumer data such as lower retail sales and declining consumer sentiment suggest that the Fed interest rate cut thesis is us still intact.

The latest US retail sales number came in lower than expected, falling 0.9 per cent month-on-month in January against the consensus estimate of a 0.1 per cent decline.

Following this, he said, the ringgit was generally stronger against the greenback during the day, touching as high as 4.4250 in the morning session before retreating thereafter.

“It appears that the ringgit attempted to break the immediate support level of RM4.43, and it did happen on several occasions during the day,” he told Bernama.

Hence, the Federal Open Market Committee (FOMC) minutes to be released on Thursday will be closely monitored and should shed more light on the discussion on monetary easing for this year.

“(This is) not to mention the positive development on the Malaysian government's fiscal position last year, which was better than expected and suggests that the appetite for fiscal consolidation will remain.

“This also should translate into a positive credit matrix in the eyes of the credit rating agencies, implying possible inflows of foreign funds into Malaysia’s capital markets,” he noted.

The ringgit traded mostly higher against major currencies.

It appreciated versus the euro to 4.6413/6476 from 4.6437/6515 at Friday’s close and advanced against the British pound to 5.5765/5840 from 5.5769/5863 previously, but slipped vis-a-vis the Japanese yen to 2.9179/9221 from 2.9048/9099.

The local note also performed mostly better against a basket of ASEAN currencies.

The ringgit strengthened versus the Singapore dollar to 3.3025/3072 from 3.3055/3113 at the end of last week, increased against the Thai baht to 13.1349/1593 from 13.1761/2059 on Friday, and firmed vis-a-vis the Philippine peso to 7.63/7.65 from 7.66/7.68.

However, it declined against the Indonesian rupiah at 272.9/273.4 compared with 272.6/273.2 at Friday’s close.

-- BERNAMA