Malaysia: Ringgit opens lower as demand for US dollar surges

• Feb 11, 2022

KUALA LUMPUR, Feb 11 — The ringgit opened lower against the US dollar today as negative sentiment clouded demand for the local currency, an analyst said.

At 9am, the local currency stood at 4.1870/1900 versus the greenback from Thursday’s close of 4.1825/1840.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the ringgit traded easier in the early session due to the strengthening US dollar Index (DXY) which gained 0.19 per cent to 95.673.

“The US Consumer Price Index for January surprised on the upside to 7.5 per cent year-on-year, the highest in nearly four decades.

“Following this, investors are betting that the US Federal Reserve (Fed) would raise the Fed Fund Rate by by a half-percentage point in March,” he told Bernama.

Consequently, the two-year US Treasury yields shot up 22 basis points to 1.58 per cent as the short-dated securities are typically sensitive to the change in monetary policy, he said. 

However, Mohd Afzanizam said the currency market has already priced in the eventual more hawkish stance by the US Fed.

“Hence, volatility is something that we cannot rule out in the forex market. As such, dollar to ringgit could range between RM4.18 and RM4.19 against the greenback today,” he said.

Meanwhile, the ringgit was traded higher against a basket of other major currencies.

It rose vis-a-vis the Japanese yen to 3.6070/6099 from Thursday’s close of 3.6118/6134 and improved against the British pound to 5.6696/6737 from 5.6761/6781.

The local currency appreciated versus the euro to 4.7728/7762 from 4.7865/7882 on Thursday and strengthened against the Singapore dollar to 3.1107/1134 from 3.1173/1187. — Bernama