KUALA LUMPUR, Aug 20 - The ringgit opened higher against the US dollar today as concerns over rising US government debt weighed on the greenback and dampened expectations of a US interest rate hike, an economist said.
At 8 am, the local currency strengthened to 4.0455/0540 against the greenback from yesterday’s close of 4.0565/0610.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam said US government debt was currently in the spotlight, with outstanding public debt having crossed US$40 trillion, surging by a third in less than five years.
“This happened at a time when the US Treasury Department attempted to bring down long-term yields via direct intervention in the bond market,” he told Bernama.
He said if the US Federal Reserve (Fed) opted to raise interest rates in the near term, it could further undermine the US government’s ability to repay its debt obligations.
Consequently, the US Dollar Index (DXY) fell 0.86 per cent to 98.798 points as the odds of a rate hike in September diminished.
“This is seen to be ringgit-positive as the interest rate differentials between the Fed Funds Rate and the overnight policy rate would remain steady,” he said.
He expects the ringgit to trade favourably against the US dollar within a range of RM4.04 to RM4.06 today.
At the opening, the local currency traded lower against a basket of major currencies.
It slipped against the Japanese yen to 2.5562/5616 from 2.5498/5528 at yesterday’s close and weakened against the British pound to 5.5023/5138 from 5.4994/5055.
The ringgit also declined against the euro to 4.7231/7330 from 4.7080/7132 previously.
The local note traded mixed against regional currencies.
It weakened against the Singapore dollar to 3.1819/1891 from 3.1778/1816 and edged down against the Thai baht to 12.3046/3372 from 12.2686/2871 previously.
The ringgit strengthened against the Indonesian rupiah to 226.7/227.3 from 227.3/227.7 at yesterday’s close and rose against the Philippine peso to 6.54/6.56 from 6.56/6.57.
