By Karina Imran & Danni Haizal Danial Donald
KUALA LUMPUR, Jan 6 (Bernama) -- The ringgit opened higher against the US dollar and other major currencies amid cautious sentiment ahead of the People's Bank of China (PBoC) fixing today, an analyst said.
At 8 am, the ringgit strengthened to 4.4890/5050 against the greenback, compared with Friday's close of 4.4975/5030.
SPI Asset Management managing director, Stephen Innes, noted that investors are closely monitoring the PBoC, particularly after the central bank allowed the onshore Chinese yuan to breach the key 7.30 level last Friday.
The PBoC fixing refers to the central bank's daily setting of the yuan's reference rate against a basket of currencies, a move closely watched by markets as it signals Beijing's stance on currency management.
"This adjustment weakened the offshore yuan, pushing it past 7.35 against the US dollar, and has created significant ripple effects across ASEAN economies.
"As the yuan continues to soften against the backdrop of rising US yields, the ringgit and other closely linked ASEAN currencies may face increased downward pressure," he told Bernama.
Echoing Innes, UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, said Malaysia's strong trade and investment ties with China mean a weaker yuan could erode the competitiveness of Malaysian exports, exerting additional pressure on the ringgit.
Furthermore, as the yuan influences the broader movements of Asian currencies, the ringgit may encounter similar headwinds, he added.
"This morning, the ringgit traded slightly higher against the US dollar in early trading, marking a 0.12 per cent increase. Despite this modest rebound, the US Dollar Index (DXY) remained elevated at 108.9, up 3.07 per cent compared with a month ago," he said.
The ringgit also strengthened against other major currencies.
It rose against the Japanese yen to 2.8496/8601 from Friday's close of 2.8606/8643, improved against the British pound to 5.5771/5970 from 5.5800/5869 previously, and strengthened vis-a-vis the euro to 4.6259/6424 from 4.6288/6345.
Gains were also seen against ASEAN currencies.
The ringgit advanced to 13.0112/0731 against the Thai baht from 13.0540/0753 and strengthened to 277.1/278.2 against the Indonesian rupiah from 277.6/278.1.
Against the Singapore dollar, the ringgit improved to 3.2745/2869 from 3.2828/2871 and edged higher to 7.71/7.75 against the Philippine peso from 7.73/7.74 previously.
-- BERNAMA