KUALA LUMPUR, July 30 - The ringgit opened higher against the US dollar, supported by the weaker greenback after the US Federal Reserve (Fed) kept interest rates steady at its latest Federal Open Market Committee (FOMC) meeting.
At 8 am, the local currency was higher marginally at 4.0850/0920 against the greenback from 4.0875/0915 at yesterday’s close.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US dollar index (DXY) fell 0.57 per cent to 100.842 points, as the US Fed decided to keep its target benchmark Federal Funds Rate between 3.50 per cent and 3.75 per cent.
“The decision was not unanimous as 3 out of 12 voting members elected for a rate hike,” he told Bernama.
Following the US Fed decision, the US Treasury yield curve steepened as a result, with the two-year yield note falling 1.0 basis point to 4.27 per cent while the 10-year yield rose 7.0 basis points to 4.68 per cent.
“During the press conference, the Fed chairman indicated that market rates have tightened, which implies that this will have an impact on the economy via higher cost of capital.
“To some degree, it also indicates that the Fed appears to be adopting a wait-and-see attitude as to how inflation would behave going forward,” he said.
Mohd Afzanizam noted that the West Texas Intermediate (WTI) and Brent crude oil have gone up by 6.56 per cent and 8.12 per cent to US$84.46 per barrel and US$90.92 per barrel, respectively, as the US military is set to strike Iran after the US military base in Jordan was under attack.
As such, he said the ringgit is expected to maintain its tight range, with some degree of appreciation against the US dollar.
The ringgit traded lower against a basket of major currencies at the opening.
It eased against the Japanese yen to 2.5015/5060 from yesterday’s close of 2.4982/5008, depreciated vis-a-vis the euro to 4.6843/6923 from 4.6561/6606, and declined versus the British pound to 5.4604/4698 from 5.4351/4405, previously.
Meanwhile, the ringgit traded mixed against regional currencies.
It weakened against the Singapore dollar to 3.1699/1755 from 3.1632/1666, and declined vis-a-vis the Thai baht to 12.2002/2266 from 12.1971/2138, previously.
The local note edged up versus the Indonesian rupiah to 226.0/226.5 from 226.1/226.5 at the close yesterday and was flat against the Philippine peso at 6.65/6.67.
