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KUALA LUMPUR – The ringgit opened flat against the US dollar this morning as investors opted for a wait-and-see attitude as the rate hike expectation has been factored in, a dealer said.
At 9am, the local currency stood at 4.7425/7465, unchanged against the greenback from yesterday’s close of 4.7425/7460.
Hong Leong Investment Bank (HLIB) Research opined that the continuous fed funds rate (FFR) - overnight policy rate (OPR) spread widening could lead to continued ringgit weakness.
It said a widening of the FFR-OPR spread, which rose from +63 basis points (bps) to +113 bps, is broadly negative for the FBM KLCI (-58% correlation) and possible further weakness in ringgit.
“As such, we expect the US dollar versus ringgit to average at 4.44 in 2022 and 4.80 at year-end,” HLIB Research said in a note today.
Bank Negara Malaysia (BNM) raised the OPR by 25 bps to 2.75%, the fourth consecutive hike since May this year, as the central bank’s Monetary Policy Committee decided to further adjust the degree of monetary accommodation.
Previously, the US Federal Reserve announced another large 75 bps hike on Wednesday, pushing the FFR higher to a range of 3.75% to 4%.
Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said the US dollar reached its highest level since January 1998 but shortly after that level was reached, the ringgit moved higher on the back of BNM’s decision.
Diniz said BNM has maintained a slow but steady pace of interest rate hikes over the past few meetings to contain inflation.
“The predictability of the interest rate increase has allowed the US dollar to rise against the ringgit over the last few months, as the hike pace of the US Fed has been much more aggressive than the interest rate increases announced for the ringgit,” he said.
The ringgit ended at a fresh all-time low against the US dollar yesterday due to weak sentiment amid the strengthening greenback.
Today, the ringgit was traded mixed against a basket of major currencies.
The local note appreciated against the British pound to 5.3040/3085 from 5.3372/3411 at yesterday’s close and strengthened against the euro to 4.6249/6288 from 4.6258/6292 previously.
However, it depreciated against the Singapore dollar to 3.3363/3395 from 3.3353/3383 and decreased vis-a-vis the Japanese yen to 3.2001/2030 from 3.1992/2018 yesterday.
Bursa Malaysia opened higher today, with the FTSE Bursa Malaysia KLCI (FBM KLCI) putting on 0.27% to 1,424.21 points on renewed buying interest, anchored mainly by gains in banking stocks, said a dealer.
At 9.06am, the benchmark FBM KLCI gained 3.83 points from yesterday’s close of 1,420.38.
The market bellwether opened 5.14 points higher at 1,425.52.
On the broader market, gainers led losers 140 to 105, while 204 counters were unchanged, 1,877 untraded, and 19 others suspended.
Turnover stood at 99.98 million units worth RM42.51 million.
Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng said local equities could see limited upside today as sentiment turned cautious, although some bargain activities may emerge.
Meanwhile, he said chaos continued to reign on Wall Street with all three major indices closing lower as traders were still digesting the Fed’s stance on interest rate hikes.
“As such, the Dow Jones Industrial Average declined 146 points while the Nasdaq fell 182 points as the US 10-year yield inched higher to 4.15%,” he said.
On the domestic front, he anticipated the FBM KLCI to hover at the 1,415-1,425 range today with some degree of accumulation on banking stocks.
Among Bursa Malaysia heavyweights, Hong Leong Bank rose 34 sen to RM20.78, Maybank gained six sen to RM8.47, Public Bank added two sen to RM4.38, RHB Bank improved four sen to RM5.52, and IHH Healthcare perked up five sen to RM5.96.
Among the actives, Citaglobal and Green Packet were flat at 29 sen and four sen respectively, while Awanbiru Technology went up 1.5 sen to 51 sen, SNS Network and Tanco climbed half-a-sen to 23.5 sen and 41 sen respectively.
On the index board, the FBM Emas Index ticked up 21.41 points to 10,124.93, the FBM 70 expanded 12.29 points to 12,071.99, and the FBMT 100 Index put on 22.68 points to 9,860.87.
The FBM Emas Shariah Index increased 8.05 points to 10,166.60, while the FBM ACE declined by 1.94 points to 4,884.49.
Sector-wise, the Financial Services Index gained 88.21 points to 16,143.85, the Energy Index was 3.03 points firmer at 711.07, while the Industrial Products and Services Index eased 0.16 of-a-point to 172.10, and the Plantation Index slid 20.76 points to 6,696.27. – Bernama, November 4, 2022